African Financial Development Dynamics: Big Time Convergence

In the first critical assessment of convergence in financial development dynamics in Africa, we find overwhelming support for integration. The empirical evidence is premised on 11 homogenous panels based on regions(Sub-Saharan and North Africa), income-levels(low, middle, lower-middle and upper-middle), legal-origins(English common-law and French civil-law) and religious dominations(Christianity and Islam). We examine convergence in financial intermediary dynamics of depth, efficiency, activity and size. Findings suggest that countries with small-sized financial intermediary depth, efficiency, activity and size are catching-up with countries with large-sized financial intermediary depth, efficiency, activity and size respectively. We also provide the speeds of convergence and time necessary to achieve a full(100%) convergence. As a policy implication African governments should not relent in structural and institutional reforms

Knowledge Economy and Financial Sector Competition in African Countries

The goal of this paper is to assess how knowledge economy (KE) plays out in financial sector competition. It suggests a practicable way to disentangle the effects of different components of KE on various financial sectors. The variables identified under the World Bank’s four knowledge economy index (KEI) are employed. An endogeneity robust panel instrumental variable fixed-effects estimation strategy is employed on data from 53 African countries for the period 1996-2010. The following findings are established. First, education and innovation in terms of scientific and technical publications broadly bear an inverse nexus with financial development. Second, the incidence of information and communication technologies is positive on all financial sectors but increases the non-formal sectors to the detriment of the formal sector. Third, economic incentives have positive implications for all sectors though the formal financial sector benefits most. Fourth, institutional regime is positive (negative) for the semi-formal (informal) financial sector. The findings contribute at the same time to the macroeconomic literature on measuring financial development and respond to the growing fields of informal sector importance, microfinance and mobile banking by means of KE promotion. Policy implications and future research directions are discussed

Modelling exchange rate variations using principal components analysis: A note.

Ekonomiese En BestuurswetenskappeNagraadse BestuurskoolPlease help us populate SUNScholar with the post print version of this article. It can be e-mailed to: [email protected]

Contagion and interdependence in African stock markets

Events in emerging finacial markets during the past decade have given rise to a fevered debate about the role of global integration in capital markets. The Mexican peso crisis of 1994, the Asian crisis of 1997 and the subsequent Russian and Brazilian crises of 1998 have provided new data with which to examine the transmission of financial variable movements from one country to another. Are African markets caught up in the same web, or are they more dependent on co-movements with each other? At what stage of integration are the least developed of emerging markets, such as those in Africa? African markets, with the exception of South Africa, are relatively small compared to other emerging markets, with a lower volume of transactions and fewer listed companies. In addition, many have low foreign investment ceilings and few have American Depository Receipts or country funds. Given the low level of development in these markets, one might hypothesise that they would not be subject to contagion. But which countries are developed "enough" to be vulnerable to contagion and which are not? In this study we aim to test the extent of market integration by measuring the degree of contagion between African equity markets and global emerging equity markets. In section 1, definitions and methods of measuring contagion are reviewed. Section 2 discusses the methodology and data. Section 3 reviews results and section 4 concludes.Articl