The role of financial markets in economic development continues to attract increasing attention both in academia and among policy-makers.1 Evidence from recent empirical studies suggests that deeper, broader, and better functioning financial markets can stimulate higher economic growth (Levine, Loayza and Beck 2000; Beck, Levine, and Loayza 1999; King and Levine 1993a, 1993b). Although evidence on Africa is still limited, the results from existing empirical work supports the view that financial development has a positive effect on economic growth in African countries (Ndikumana 2000; Allen and Ndikumana 2000; Gelbard and Leite 1999; Odedokun 1996; Spears 1992). The discussion of strategies for enhancing African economic development must therefore take into account the role of the financial sector in economic development
