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


  • Simplice A, Asongu


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.

Suggested Citation

  • Simplice A, Asongu, 2012. "Financial sector competition and knowledge economy: evidence from SSA and MENA countries," MPRA Paper 43009, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43009

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    References listed on IDEAS

    1. 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.
    2. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    3. Simplice A, Asongu, 2012. "New indicators for the mobile banking nexus," MPRA Paper 38575, University Library of Munich, Germany.
    4. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law and finance: why does legal origin matter?," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 653-675, December.
    5. Demetriades, Panicos O. & Hussein, Khaled A., 1996. "Does financial development cause economic growth? Time-series evidence from 16 countries," Journal of Development Economics, Elsevier, vol. 51(2), pages 387-411, December.
    6. 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.
    7. Asongu Simplice, 2011. "New financial intermediary development indicators for developing countries," Working Papers 11/005, African Governance and Development Institute..
    8. World Bank, 2007. "Building Knowledge Economies : Advanced Strategies for Development," World Bank Publications, The World Bank, number 6853, March.
    9. 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.
    10. Merton H. Miller, 2012. "Financial Markets and Economic Growth," Journal of Applied Corporate Finance, Morgan Stanley, vol. 24(1), pages 8-13, March.
    11. Henry Kaiser, 1974. "An index of factorial simplicity," Psychometrika, Springer;The Psychometric Society, vol. 39(1), pages 31-36, March.
    12. Simplice A, Asongu, 2012. "How has mobile banking stimulated financial development in Africa?," MPRA Paper 38576, University Library of Munich, Germany.
    13. Kumbhakar, Subal C. & Mavrotas, George, 2005. "Financial Sector Development and Productivity Growth," WIDER Working Paper Series 068, World Institute for Development Economic Research (UNU-WIDER).
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    More about this item


    Financial development; Knowledge Economy;

    JEL classification:

    • P00 - Economic Systems - - General - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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