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Financial sector competition and knowledge economy: evidence from SSA and MENA countries

  • Asongu Simplice



The goal of this paper is to assess how financial sector competition plays-out in the development of knowledge economy (KE). It contributes at the same time to the macroeconomic literature on measuring financial development and response to the growing field of KE by means of informal sector promotion, micro finance and mobile banking. It suggests a practicable way to disentangle the effects of various financial sectors on different components of KE. The variables identified under the World Bank’s four knowledge economy index (KEI) are employed. Three hypotheses based on seven propositions are tested. Results show: (1) the informal financial sector, a previously missing component in the definition of the financial system by the IMF significantly affects KE dimensions; (2) disentangling different components of the existing measurement of the financial system improves dynamics in the KE-finance nexus and; (3) introduction of measures of sector importance provides relevant new insights into how financial sector competition affects KE.

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Paper provided by African Governance and Development Institute. in its series Working Papers with number 12/021.

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Length: 37
Date of creation: 20 Aug 2012
Date of revision:
Publication status: Published in Journal of the Knowledge Economy
Handle: RePEc:agd:wpaper:12/021
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  1. repec:tpr:qjecon:v:108:y:1993:i:3:p:717-37 is not listed on IDEAS
  2. Asongu Simplice, 2012. "How has Mobile Banking Stimulated Financial Development in Africa?," Working Papers 12/027, African Governance and Development Institute..
  3. Kumbhakar, Subal C. & Mavrotas, George, 2005. "Financial Sector Development and Productivity Growth," Working Paper Series RP2005/68, World Institute for Development Economic Research (UNU-WIDER).
  4. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  5. Simplice A., Asongu, 2011. "New financial intermediary development indicators for developing countries," MPRA Paper 30921, University Library of Munich, Germany.
  6. Merton H. Miller, 1998. "Financial Markets and Economic Growth," Journal of Applied Corporate Finance, Morgan Stanley, vol. 11(3), pages 8-15.
  7. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
  8. Henry Kaiser, 1974. "An index of factorial simplicity," Psychometrika, Springer, vol. 39(1), pages 31-36, March.
  9. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  10. Ang, James B. & McKibbin, Warwick J., 2007. "Financial liberalization, financial sector development and growth: Evidence from Malaysia," Journal of Development Economics, Elsevier, vol. 84(1), pages 215-233, September.
  11. Suleiman Abu-Bader & Aamer S. Abu-Qarn, 2008. "Financial Development and Economic Growth: Empirical Evidence from Six MENA Countries," Review of Development Economics, Wiley Blackwell, vol. 12(4), pages 803-817, November.
  12. Simplice A, Asongu, 2012. "New indicators for the mobile banking nexus," MPRA Paper 38575, University Library of Munich, Germany.
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