IDEAS home Printed from https://ideas.repec.org/p/agd/wpaper/17-015.html
   My bibliography  Save this paper

Assessing marginal, threshold and net effects of financial globalisation on financial development in Africa

Author

Listed:
  • Simplice Asongu

    (Yaoundé/Cameroun)

Abstract

The present inquiry contributes to extant literature by simultaneously accounting for variations in financial development and financial globalisation in the assessment of hypothetical initial financial development conditions for the rewards of financial globalisation. For this purpose, we examine marginal, threshold and net effects of financial globalisation on financial development throughout the conditional distributions of financial development. The empirical evidence is based on contemporary and non-contemporary quantile regressions with data from 53 African countries for the period 1996-2011. Financial globalisation is measured with Net Foreign Direct Investment inflows whereas financial development entails all dimensions identified by the Financial Development and Structure Database of the World Bank. The findings consistently reveal: (i) positive marginal effects, (ii) unfeasible financial globalisation positive thresholds and (iii) negative financial globalisation net effects. The second and third findings are fundamentally due to marginal effects of low positive magnitude. Policy implications are discussed.

Suggested Citation

  • Simplice Asongu, 2017. "Assessing marginal, threshold and net effects of financial globalisation on financial development in Africa," Working Papers of the African Governance and Development Institute. 17/015, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:17/015
    as

    Download full text from publisher

    File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/Financial-globalisation-and-financial-development-in-Africa2.pdf
    File Function: Revised version, 2017
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Isaac Koomson & Simplice A. Asongu, 2016. "Relative Contribution of Child Labour to Household Farm and Non-Farm Income in Ghana: Simulation with Child's Education," African Development Review, African Development Bank, vol. 28(1), pages 104-115, March.
    2. Simplice Asongu & Uchenna Efobi & Ibukun Beecroft, 2015. "Inclusive Human Development in Pre-crisis Times of Globalization-driven Debts," African Development Review, African Development Bank, vol. 27(4), pages 428-442, December.
    3. Asongu, Simplice, 2017. "Improving financial access in Africa: insights from information sharing and financial sector development," MPRA Paper 83071, University Library of Munich, Germany.
    4. Eswar S. Prasad & Raghuram G. Rajan, 2008. "A Pragmatic Approach to Capital Account Liberalization," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 149-172, Summer.
    5. M Ayhan Kose & Eswar Prasad & Kenneth Rogoff & Shang-Jin Wei, 2009. "Financial Globalization: A Reappraisal," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 8-62, April.
    6. Christian Lambert Nguena & Roger Tsafack Nanfosso, 2014. "Banking Activity Sensitivity to Macroeconomic Shocks and Financial Policies Implications: The Case of CEMAC Sub-region," African Development Review, African Development Bank, vol. 26(1), pages 102-117, March.
    7. Mohammed Shuaibu, 2015. "Does Trade Tariff Liberalisation Matter for Intra-ECOWAS Trade?," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 8(1), pages 83-112, August.
    8. Ayhan Kose, M. & Prasad, Eswar S. & Taylor, Ashley D., 2011. "Thresholds in the process of international financial integration," Journal of International Money and Finance, Elsevier, vol. 30(1), pages 147-179, February.
    9. Simplice Asongu & Jacinta C. Nwachukwu, 2015. "Finance and Inclusive Human Development: Evidence from Africa," Working Papers of the African Governance and Development Institute. 15/061, African Governance and Development Institute..
    10. Dani Rodrik & Arvind Subramanian, 2009. "Why Did Financial Globalization Disappoint?," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 112-138, April.
    11. Montfort Mlachila & René Tapsoba & Sampawende J. A. Tapsoba, 2017. "A Quality of Growth Index for Developing Countries: A Proposal," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(2), pages 675-710, November.
    12. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "The synergy of financial sector development and information sharing in financial access: Propositions and empirical evidence," Research in International Business and Finance, Elsevier, vol. 40(C), pages 242-258.
    13. Augustin Kwasi Fosu, 2015. "Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 44-59, March.
    14. Stiglitz, Joseph E., 2000. "Capital Market Liberalization, Economic Growth, and Instability," World Development, Elsevier, vol. 28(6), pages 1075-1086, June.
    15. Carlos Barros & Bruno Damásio & João Ricardo Faria, 2014. "Reverse FDI in Europe: An Analysis of Angola's FDI in Portugal," African Development Review, African Development Bank, vol. 26(1), pages 160-171.
    16. Simplice A Asongu & Lieven De Moor, 2017. "Financial Globalisation Dynamic Thresholds for Financial Development: Evidence from Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 192-212, January.
    17. Simplice A Asongu, 2015. "A Good Turn Deserves Another: Political Stability, Corruption and Corruption-Control," Economics Bulletin, AccessEcon, vol. 35(4), pages 2037-2048.
    18. Chunlai Chen, 2011. "Foreign Direct Investment in China," Books, Edward Elgar Publishing, number 14100.
    19. Peter Blair Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Journal of Economic Literature, American Economic Association, vol. 45(4), pages 887-935, December.
    20. M.R. Mulwa & A. Emrouznejad & F.M. Murithi, 2009. "Impact of liberalization on efficiency and productivity of sugar industry in Kenya," Journal of Economic Studies, Emerald Group Publishing, vol. 36(3), pages 250-264, July.
    21. John Anyanwu, 2014. "Working Paper 201 - Does Intra-African Trade Reduce Youth Unemployment in Africa ?," Working Paper Series 2107, African Development Bank.
    22. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    23. Lawrence H. Summers, 2000. "International Financial Crises: Causes, Prevention, and Cures," American Economic Review, American Economic Association, vol. 90(2), pages 1-16, May.
    24. Neil Foster‐McGregor & Anders Isaksson & Florian Kaulich, 2015. "Foreign Ownership and Labour in Sub‐Saharan African Firms," African Development Review, African Development Bank, vol. 27(2), pages 130-144, June.
    25. Albert Makochekanwa, 2014. "Welfare Implications of COMESA-EAC-SADC Tripartite Free Trade Area," African Development Review, African Development Bank, vol. 26(1), pages 186-202.
    26. Simplice Asongu, 2014. "Financial development dynamic thresholds of financial globalization: Evidence from Africa," Journal of Economic Studies, Emerald Group Publishing, vol. 41(2), pages 166-195, March.
    27. Motelle, Sephooko & Biekpe, Nicholas, 2015. "Financial integration and stability in the Southern African development community," Journal of Economics and Business, Elsevier, vol. 79(C), pages 100-117.
    28. Yongfu Huang, 2005. "What determines financial development?," Bristol Economics Discussion Papers 05/580, School of Economics, University of Bristol, UK.
    29. Sabina Kummer‐Noormamode, 2014. "Does Trade with China Have an Impact on African Countries' Growth?," African Development Review, African Development Bank, vol. 26(2), pages 397-415, June.
    30. Evans Stephen Osabuohien & Uchenna Rapuluchukwu Efobi, 2013. "Africa's Money in Africa," South African Journal of Economics, Economic Society of South Africa, vol. 81(2), pages 292-306, June.
    31. Sheilla Nyasha & Nicholas M. Odhiambo, 2015. "The Impact of Banks and Stock Market Development on Economic Growth in South Africa: an ARDL-bounds Testing Approach," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 9(1), March.
    32. Sheilla Nyasha & Nicholas M. Odhiambo, 2015. "Do banks and stock markets spur economic growth? Kenya's experience," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 7(1), pages 54-65.
    33. Mohammed Shuaibu, 2015. "Trade Liberalization and Intra-Regional Trade: A Case of Selected ECOWAS Countries," African Development Review, African Development Bank, vol. 27(1), pages 27-40, March.
    34. Erasmus L. Owusu & Nicholas M. Odhiambo, 2014. "Stock market development and economic growth in Ghana: an ARDL-bounds testing approach," Applied Economics Letters, Taylor & Francis Journals, vol. 21(4), pages 229-234, March.
    35. Peter Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Discussion Papers 07-004, Stanford Institute for Economic Policy Research.
    36. Gregory N. Price & Juliet U. Elu, 2014. "Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis," Journal of Economic Studies, Emerald Group Publishing, vol. 41(5), pages 737-750, September.
    37. H.M. Leung, 2003. "External debt and worsening business cycles in less developed countries," Journal of Economic Studies, Emerald Group Publishing, vol. 30(2), pages 155-168, May.
    38. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    39. John C. Anyanwu, 2014. "Does Intra‐African Trade Reduce Youth Unemployment in Africa?," African Development Review, African Development Bank, vol. 26(2), pages 286-309, June.
    40. Henry Karamuriro Tumwebaze & Alex Thomas Ijjo, 2015. "Regional Economic Integration and Economic Growth in the COMESA Region, 1980–2010," African Development Review, African Development Bank, vol. 27(1), pages 67-77, March.
    41. Simplice A. Asongu, 2015. "Finance and growth: new evidence from meta-analysis," Managerial Finance, Emerald Group Publishing, vol. 41(6), pages 615-639, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simplice Asongu & Uduak S. Akpan & Salisu R. Isihak, 2018. "Determinants of foreign direct investment in fast-growing economies: evidence from the BRICS and MINT countries," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-17, December.
    2. Vanessa S. Tchamyou, 2019. "The Role of Information Sharing in Modulating the Effect of Financial Access on Inequality," Journal of African Business, Taylor & Francis Journals, vol. 20(3), pages 317-338, July.
    3. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Trade and FDI Thresholds of CO2 emissions for a Green Economy in Sub-Saharan Africa," Working Papers 20/072, European Xtramile Centre of African Studies (EXCAS).
    4. Fotio, Herve Kaffo & Nchofoung, Tii N. & Asongu, Simplice A., 2022. "Financing renewable energy generation in SSA: Does financial integration matter?," Renewable Energy, Elsevier, vol. 201(P2), pages 47-59.
    5. Asongu, Simplice & Nchofoung, Tii, 2021. "The terrorism-finance nexus contingent on globalisation and governance dynamics in Africa," MPRA Paper 110130, University Library of Munich, Germany.
    6. Simplice A. Asongu & Valentine B. Soumtang & Ofeh M. Edoh, 2021. "Financial institutions, poverty and severity of poverty in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 21/081, African Governance and Development Institute..
    7. Simplice A. Asongu & Nicholas M. Odhiambo, 2023. "Microfinance institutions and female entrepreneurship in Sub-Saharan Africa: avoidable female unemployment thresholds," Working Papers 23/018, European Xtramile Centre of African Studies (EXCAS).
    8. Simplice A. Asongu & Joseph Nnanna, 2020. "Governance and the Capital Flight Trap in Africa," Working Papers of the African Governance and Development Institute. 20/024, African Governance and Development Institute..
    9. Yselle Flora Kuete Malah & Simplice Asongu, 2021. "An empirical analysis of human trafficking in an era of globalization," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 49(7), pages 1269-1283, October.
    10. Simplice A. Asongu & Barbara D. Mensah, 2022. "Thresholds of external flows in financial development for environmental sustainability in sub-Saharan Africa," Working Papers 22/082, European Xtramile Centre of African Studies (EXCAS).
    11. Asongu, Simplice & Odhiambo, Nicholas, 2020. "The role of Globalization in Modulating the Effect of Environmental Degradation on Inclusive Human Development," MPRA Paper 103143, University Library of Munich, Germany.
    12. Simplice A. Asongu & Rexon T. Nting & Joseph Nnanna, 2020. "Linkages between Globalisation, Carbon Dioxide Emissions and Governance in Sub-Saharan Africa," International Journal of Public Administration, Taylor & Francis Journals, vol. 43(11), pages 949-963, August.
    13. Simplice A. Asongu & Valentine B. Soumtang & Ofeh M. Edoh, 2021. "Financial determinants of informal financial development in Sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 21/077, African Governance and Development Institute..
    14. Asongu, Simplice A. & le Roux, Sara, 2023. "The role of mobile money innovations in transforming unemployed women to self-employed women in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    15. Asongu, Simplice A. & le Roux, Sara, 2023. "The role of mobile money innovations in transforming unemployed women to self-employed women in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    16. Simplice A. Asongu & Nicholas Biekpe, 2018. "Globalization and terror in Africa," International Economics, CEPII research center, issue 156, pages 86-97.
    17. Simplice A. Asongu & Jules R. Minkoua N., 2018. "Dynamic openness and finance in Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(4), pages 409-430, May.
    18. Matabaro Borauzima, Luc & Niyondiko, Dominique & Muller, Aline, 2021. "Does cross-border banking enhance competition and cost efficiency? Evidence from Africa," Journal of Multinational Financial Management, Elsevier, vol. 62(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simplice Asongu & Lieven De Moor, 2015. "Financial globalisation and financial development in Africa: assessing marginal, threshold and net effects," Working Papers of the African Governance and Development Institute. 15/040, African Governance and Development Institute..
    2. Simplice Asongu & Vanessa Tchamyou, 2015. "The Comparative African Regional Economics of Globalization in Financial Allocation Efficiency," Working Papers of the African Governance and Development Institute. 15/053, African Governance and Development Institute..
    3. Simplice A. Asongu & Joseph Nnanna & Vanessa S. Tchamyou, 2020. "The comparative African regional economics of globalization in financial allocation efficiency: the pre-crisis era revisited," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-41, December.
    4. Simplice A Asongu & Lieven De Moor, 2017. "Financial Globalisation Dynamic Thresholds for Financial Development: Evidence from Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 192-212, January.
    5. Asongu, Simplice A. & Koomson, Isaac & Tchamyou, Vanessa S., 2017. "Financial globalisation uncertainty/instability is good for financial development," Research in International Business and Finance, Elsevier, vol. 41(C), pages 280-291.
    6. Asongu, Simplice & Odhiambo, Nicholas, 2020. "Trade and FDI Thresholds of CO2 emissions for a Green Economy in Sub-Saharan Africa," MPRA Paper 107494, University Library of Munich, Germany.
    7. Simplice A. Asongu & Joseph Nnanna & Paul N. Acha-Anyi, 2021. "The Openness Hypothesis in the Context of Economic Development in Sub-Saharan Africa: The Moderating Role of Trade Dynamics on FDI," The International Trade Journal, Taylor & Francis Journals, vol. 35(4), pages 336-359, July.
    8. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "At what levels of financial development does information sharing matter?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-30, December.
    9. Simplice A. Asongu & Pritam Singh & Sara Le Roux, 2018. "Fighting Software Piracy: Some Global Conditional Policy Instruments," Journal of Business Ethics, Springer, vol. 152(1), pages 175-189, September.
    10. Simplice A. Asongu & John C. Anyanwu & Vanessa S. Tchamyou, 2019. "Technology-driven information sharing and conditional financial development in Africa," Information Technology for Development, Taylor & Francis Journals, vol. 25(4), pages 630-659, October.
    11. Simplice A. Asongu & Jules R. Minkoua N., 2018. "Dynamic openness and finance in Africa," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(4), pages 409-430, May.
    12. Kodila-Tedika, Oasis & Asongu, Simplice A. & Cinyabuguma, Matthias & Tchamyou, Vanessa S., 2017. "Financial development and prehistoric geographical isolation: global evidence," Financial History Review, Cambridge University Press, vol. 24(3), pages 283-306, December.
    13. Simplice A. Asongu & Paul N. Acha-Anyi, 2017. "ICT, conflicts in financial intermediation and financial access: evidence of synergy and threshold effects," Netnomics, Springer, vol. 18(2), pages 131-168, December.
    14. Asongu Simplice & Nwachukwu Jacinta, 2017. "Globalization and Inclusive Human Development in Africa," Man and the Economy, De Gruyter, vol. 4(1), pages 1-24, June.
    15. Simplice A. Asongu & Jacinta C. Nwachukwu, 2018. "Recent finance advances in information technology for inclusive development: a systematic review," Netnomics, Springer, vol. 19(1), pages 65-93, October.
    16. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Research Africa Network Working Papers 17/009, Research Africa Network (RAN).
    17. Simplice Asongu & Uchenna Efobi & Ibukun Beecroft, 2015. "Inclusive Human Development in Pre-crisis Times of Globalization-driven Debts," African Development Review, African Development Bank, vol. 27(4), pages 428-442, December.
    18. Asongu Simplice, 2012. "Financial development dynamic thresholds of financial globalization: evidence from Africa," Working Papers of the African Governance and Development Institute. 12/020, African Governance and Development Institute..
    19. Simplice A. Asongu & Lieven De Moor, 2015. "Recent advances in finance for inclusive development: a survey," Research Africa Network Working Papers 15/005, Research Africa Network (RAN).
    20. Simplice Asongu & Lieven De Moor & Vanessa Tchamyou, 2015. "Pre- and post-crisis dynamics of financial globalisation for financial development in Africa," Working Papers of the African Governance and Development Institute. 15/045, African Governance and Development Institute..

    More about this item

    Keywords

    Banking; International investment; Financial integration; Development;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agd:wpaper:17/015. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/agdiycm.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Asongu Simplice (email available below). General contact details of provider: https://edirc.repec.org/data/agdiycm.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.