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May the Soul of the IFS Financial System Definition RIP in Developing Countries

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  • Asongu Simplice

    (Yaoundé/Cameroun)

Abstract

In this paper, we dissect with great acuteness contemporary insufficiencies of the IFS (2008) definition of the financial system and conclude from sound theoretical underpinnings and empirical justifications that the foundation, on which it is based, while solid for developed countries, holds less ground in developing countries. Perhaps one of the deepest empirical hollows in the financial development literature has been the equation of financial depth in the perspective of money supply to liquid liabilities. This equation has put on the margin (and skewed) burgeoning phenomena of mobile banking, knowledge economy (KE), inequality…etc. We conclude that the informal financial sector, a previously missing component in the IFS conception and definition of the financial system can only be marginalized at the cost of misunderstanding recent burgeoning trends in mobile phone penetration, KE and poverty. Hence, the IFS definition has incontrovertibly fought its final dead battle and lost in the face of soaring trends highlighted above. Despite the plethora of econometric and policy-making sins the definition has committed in developing countries through bias estimates and misleading inferences, may its soul RIP.

Suggested Citation

  • Asongu Simplice, 2014. "May the Soul of the IFS Financial System Definition RIP in Developing Countries," Working Papers of the African Governance and Development Institute. 14/021, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:14/021
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    References listed on IDEAS

    as
    1. Simplice Asongu, 2015. "Liberalisation and Financial Sector Competition: A Critical Contribution to the Empirics with an African Assessment," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 425-451, September.
    2. Simplice A. Asongu, 2014. "Knowledge Economy and Financial Sector Competition in African Countries," African Development Review, African Development Bank, vol. 26(2), pages 333-346, June.
    3. Asongu Simplice, 2013. "Mobile banking and mobile phone penetration: which is more pro-poor in Africa?," Working Papers of the African Governance and Development Institute. 13/033, African Governance and Development Institute..
    4. Isaac Mbiti & David N. Weil, 2015. "Mobile Banking: The Impact of M-Pesa in Kenya," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 247-293, National Bureau of Economic Research, Inc.
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    7. Simplice A. Asongu, 2013. "How has Mobile Phone Penetration Stimulated Financial Development in Africa?," Journal of African Business, Taylor & Francis Journals, vol. 14(1), pages 7-18, April.
    8. Simplice A. Asongu, 2014. "New Financial Development Indicators: With a Critical Contribution to Inequality Empirics," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 4(1), pages 33-50.
    9. 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.
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    11. Simplice Asongu, 2015. "Financial Sector Competition and Knowledge Economy: Evidence from SSA and MENA Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(4), pages 717-748, December.
    12. Vanessa Simen Tchamyou, 2017. "The Role of Knowledge Economy in African Business," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(4), pages 1189-1228, December.
    13. Simplice A, Asongu, 2012. "How has mobile banking stimulated financial development in Africa?," MPRA Paper 38576, University Library of Munich, Germany.
    14. Jenny C. Aker & Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 207-232, Summer.
    15. Simplice Asongu, 2015. "The impact of mobile phone penetration on African inequality," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 42(8), pages 706-716, August.
    16. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
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    More about this item

    Keywords

    Banking; Mobile Phones; Shadow Economy; Financial Development; Poverty;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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