Financial sector development convergence in Africa: Evidence from bank- and market-based measures

Authors

  • Yakubu Awudu Sare Department of Banking and Finance School of Business and Law University for Development Studies Ghana, West Africa http://orcid.org/0000-0003-0736-8599
  • Eric Evans Osei Opoku Department of Economics and Finance, City University of Hong Kong, Hong Kong
  • Muazu Ibrahim Department of Banking and Finance, School of Business and Law University for Development Studies, Post Office Box UY 36, Upper West region, Wa, Ghana
  • Isaac Koomson UNE Business School, Faculty of Science, Agriculture, Business and Law, University of New England, Armidale, NSW, Australia

DOI:

https://doi.org/10.17811/ebl.8.4.2019.166-175

Abstract

In this paper, we employ data from 46 African countries over the period 1980–2014 to examine financial sector development convergence, using bank- and market-based measures of financial development. Within the framework of the generalized method of moments (GMM), we present evidence that both the bank– and market–based financial sector development in Africa diverge over time. However, we find strong evidence of financial development divergence when using bank-based financial sector development indicators whereas this evidence is weaker for market-based indicators. Given the divergence in the level of finance, the gap between countries with underdeveloped and well–developed financial markets will continue to widen as financially less developed countries do not appear to catch-up with the financially more developed economies.

 

 

Keywords: Financial development; divergence, convergence, Africa

JEL Classification: F15, F36, G01, O55

Author Biographies

Yakubu Awudu Sare, Department of Banking and Finance School of Business and Law University for Development Studies Ghana, West Africa

Senior Lecturer

Department of Banking and Finance

School of Business and Law
University for Development Studies
Ghana, West Africa

Eric Evans Osei Opoku, Department of Economics and Finance, City University of Hong Kong, Hong Kong

Lecturer

Department Finance and Economic

Muazu Ibrahim, Department of Banking and Finance, School of Business and Law University for Development Studies, Post Office Box UY 36, Upper West region, Wa, Ghana

Lecturer

Department of Banking and Finance, School of Business and Law

Isaac Koomson, UNE Business School, Faculty of Science, Agriculture, Business and Law, University of New England, Armidale, NSW, Australia

lecturer

UNE Business School, Faculty of Science, Agriculture, Business and Law,

References

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Published

18-12-2019

How to Cite

Sare, Y. A., Opoku, E. E. O., Ibrahim, M., & Koomson, I. (2019). Financial sector development convergence in Africa: Evidence from bank- and market-based measures. Economics and Business Letters, 8(4), 166–175. https://doi.org/10.17811/ebl.8.4.2019.166-175

Issue

Vol. 8 No. 4 (2019): December

Section

Articles

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