Financial openness, trade openness and financial development

Evidence from sub-Saharan Africa

Bibliographic Data

ID21541023
AuthorsWitness Nyasha Bandura (0000-0003-1311-312X, University of South Africa, corresponding author)
Year2022
Volume39
Issue6
Pages947-959
Publication date2022-11-02
Open AccessNo
TypeARTICLE
VenueDevelopment Southern Africa (JOURNAL)
Journal identifiersISSN: 0376-835X • E-ISSN: 1470-3637
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/0376835x.2021.1988517
OpenAlexW3211258841
LanguageEN
Citations received1
References cited30

The study investigates the impact of financial openness (de facto) and trade openness on financial development for 26 sub-Saharan African countries over the period 1982–2016. A system Generalized Method of Moments methodological approach is utilised with 5-year averaged data. There is no evidence of the combined/joint impact of trade and financial openness towards financial development which disproves the existence of openness hypothesis by Rajan and Zingales [(2003). The great reversals: the politics of financial development in the twentieth century. Journal of Financial Economics 69(1), 5–50]. Comparatively, the region shows that it can positively benefit from trade openness to financial openness. Even though trade openness shows weak positive impact on financial development, the results are not robust, as they vary from one model to the other. Institutions show positive contribution towards financial development, but the impact is only significant towards private credit by banks. It is recommended that the institutional quality in the region be improved so that the region could fully benefit from international business, largely through investor protection

Economics · Financial system · International economics · Openness to experience · Banking stability, regulation, efficiency · Economic Growth and Development · Microfinance and Financial Inclusion · Finance

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