Browsing by Subject "African countries"

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    Open Access
    Financialisation and economic growth in Africa
    (2020) Kungwane, Reabetswe; Alhassan, Abdul Latif
    Despite the growing literature on financial development-economic growth nexus, there exists a paucity of empirical studies that explore the impact of financialisation on economic growth while focusing on the competitiveness of the financial sector. This study examines the revealed comparative advantages of 34 developing African countries from the period 2008 to 2017 and goes further to determine the impact of the revealed comparative advantage indices on economic growth. Revealed comparative advantage is used as an alternative proxy to financialisation, while economic growth is measured in terms of GDP per capita. In order to determine the impact, a panel study approach was followed, using a multiple linear regression model. The study produces two findings. Firstly, we find that the majority of African countries do not reveal a comparative advantage in financial services. This finding confirms our expectation. Secondly, we find that there exists a negative and significant relationship between financialisation and economic growth. The findings suggest that as developing countries in Africa gain comparative advantages in financial services, those gains have a detrimental impact on their economic growth. Informed by the findings of this study, which have implications for financial market development in Africa, the main recommendations are firstly that regulators need to play their part in reducing the cost of business for financial services institutions—particularly compliance costs, so as to encourage competition and development in the financial services sector, without compromising their responsibility to protect consumers. Secondly, better insights regarding cross-border trading and its impact on economic growth, profitability and the accumulation of foreign currency reserves need to be gained, in order to come up with more conducive regulatory frameworks that do not result in penalties for local firms, rendering them uncompetitive relative to foreign firms. Additionally, management at financial institutions have the responsibility of ensuring that benefits derived from their cross-border business go beyond shareholder value, but that reinvestment into the real economy takes place either through increased lending or equity investments and should also ensure that sufficient investments are made into the infrastructure required to increase the institution's competitiveness. Finally, Government and regulators needs to pay attention to how cross-border financial transactions are taxed, especially considering the new era of FinTech's, cryptocurrencies, and deepening regional integration, while at the same time ensuring that there is greater depth, bread and liquidity of their local financial markets.
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    Open Access
    The impact of mobile money on macroeconomic development: insights from Côte d'Ivoire
    (2024) Payaneeandee, Mary Catherine Sonia,; Alhassan, Abdul Latif
    Mobile money has contributed to financial inclusion across African countries. Indeed, mobile money has proven immense economic benefits to developing countries and is a driving force behind numerous economic activities. However, there are concerns that mobile money may perhaps weaken financial stability. The consequences of mobile money on these macroeconomic indicators such as: inflation, interest spread rates, money stock, private-sector credit, and economic aggregate activity are intriguing. Côte d'Ivoire is viewed as the most robust financial state within the African continent and mobile money has evolved rapidly across the country. As such, this gives room to prospect the consequences of mobile money on macroeconomic development in Côte d'Ivoire. Indeed, the core idea of this analysis is to evaluate the repercussion of mobile money on macroeconomic development in Côte d'Ivoire. The study adopted a time series approach, making use of monthly data from January 2013 till December 2021. The economic investigation adopts the structural vector autoregressive (SVAR) to analyse the data. The results showed moderate effect on the macroeconomic development variables in Côte d'Ivoire. Specifically, the shocks involving mobile money may take time to impact productivity but nonetheless support economic aggregate activity in the country. Mobile money seems to not cause inflationary pressures. In the case of money stock, mobile money leads to a shift from non-financial assets to financial assets thus influencing money supply. Furthermore, mobile money may take time to influence supply of private credit but remains an essential tool for the supply private credit. As for interest spread rates, a positive impact is noticed, and remain relatively stable. Regarding the conduct of monetary policy, mobile money has moderate impact on monetary policy transmission mechanisms, monetary effects take longer to gain full potential in Côte d'Ivoire.