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Financial development, trade openness and financial openness: do income levels matter for developing countries?

  • Simplice A, Asongu

Using a panel of 29 African middle and low income countries with data spanning from 1988 to 2007, we analyze linkages between openness and financial intermediary development when income levels matter. Main findings are four: firstly, openness in the last two decades has not been the effect of growth and welfare, but of structural adjustment policies imposed by the IMF and World Bank; secondly, but for the positive impact of trade openness on the financial depth of low income countries, openness in sampled countries fail to bring about financial intermediary development; thirdly, financial openness brings trade openness for both income levels, but the reverse is true only for middle income countries; lastly, low income countries will benefit more from trade openness through financial deepening and financial openness than their middle income counterparts.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27441.

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Date of creation: 14 Dec 2010
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Handle: RePEc:pra:mprapa:27441
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  2. Jennifer Mbabazi, & Chris Milner, & Oliver Morrissey, . "Trade Openness, Trade Costs and Growth: Why Sub-Saharan Africa Performs Poorly," Discussion Papers 06/08, University of Nottingham, CREDIT.
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  16. Chandran, V.G.R. & Munusamy, 2009. "Trade openness and manufacturing growth in Malaysia," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 637-647, September.
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