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Exchange rate liberalization and market efficiency in the Gambia

Author

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  • Brendan M. Walsh

Abstract

This paper examines the experience of The Gambia following the liberalization of its exchange rate and financial markets in the mid-1980's. It is shown that although nominal interest rates are high, and the real interest rate positive, there is no evidence of systematic excess returns to holders of Gambian treasury bills. The outcome suggests that floating the exchange rate can avert the "peso problem" and work efficiently even in an extremely thin foreign exchange market.

Suggested Citation

  • Brendan M. Walsh, 1993. "Exchange rate liberalization and market efficiency in the Gambia," Working Papers 199320, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:199320
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    File URL: http://hdl.handle.net/10197/1731
    File Function: First version, 1993
    Download Restriction: no
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    More about this item

    Keywords

    Exchange rates; Floating; Libearlization; Efficient markets; Interest rates--Gambia; Foreign exchange rates--Gambia; Foreign exchange--Gambia;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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