آزاد سازی مالی، شکنندگی مالی و رشد اقتصادی در صحرای افریقا
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|15902||2012||11 صفحه PDF||سفارش دهید||محاسبه نشده|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Financial Stability, Volume 8, Issue 3, September 2012, Pages 150–160
This paper investigates the dual role of financial liberalization on growth using a bank crisis model and a growth model. It applies panel econometric techniques on data covering 34 countries in Sub-Saharan Africa over the period 1983–2008. The results indicate that the growth retarding effects of financial liberalization, are dominant over growth enhancing effects, which show mixed results. The results also indicate that institutional variables, human capital formation and foreign aid are key factors in explaining growth in Sub-Saharan Africa. The study therefore recommends adoption of a ‘managed financial openness’ policy and institutional reform measures.
In the past three decades nearly all countries in Sub-Saharan Africa have implemented liberalization of the financial sector. During this period most countries eased or lifted bank interest rates caps, reduced interference in credit allocation decisions, lowered compulsory reserve requirements and entry barriers, and privatised many state owned commercial banks. In addition, financial liberalization period has seen most countries in Africa seek to develop local stock markets, and encourage entry of foreign financial intermediaries. As shown by Demirguc-Kunt and Degatriache (1998), financial liberalization in developing countries is generally viewed as a way of moving away from state intervention in a financially repressed economy as advocated by the influential work of McKinnon (1973) and Shaw (1973). However, the envisaged positive role of financial liberalization has been clouded by, among other factors, increased financial fragility experienced after financial sector liberalization. The banking sector in Africa, in the 1980s and 1990s experienced a number of problems, some of which graduated to full-fledged systematic crises as shown by Caprio and Klingebiel (1996) and Lindgren et al. (1996). In the literature therefore, financial liberalization is viewed as one of the most controversial policies, not only because of its associated potential risks to the entire global economy but also its potential negative effect on the finance-growth nexus. In the past two decades, the consensus on finance-growth link was firmly entrenched, however, recent literature suggests a dual role of finance that diminishes the importance attached to the original consensus. This is particularly in the wake of recent episodes of financial crises and their linkages to financial liberalization policies besides the credit growth stagnation experience in some countries following liberalization (Reinhart and Ioannis, 2003). It is against this background and coupled with the fact that financial liberalization policy has been extensively embraced as a route towards financial deepening and hence increased growth in African economies, that this study seeks to address the following research questions: first, can any of the episodes of crisis experienced in Africa be explained by financial liberalization and second, how have the two separate effects of financial liberalization identified in the literature, if applicable to Africa, interacted with growth. Answering these concerns will provide policy insights on the direction of future reform and possibly provide direction on any mitigation measures against financial instability in the process of financial reform. The main objective of this study therefore is to understand the financial liberalization–fragility–growth linkage and hence shed light on the economic significance of financial liberalization. The study addresses the following two specific objectives: (i) Empirical examination of the linkage between financial liberalization and fragility. (ii) Empirical examination of the dual effects of financial liberalization on growth. The rest of the paper proceeds as follows; Section 2 discusses key developments of macro economic variables; Section 3 reviews previous work on the relationships between financial liberalization and growth; Section 4 outlines the methodology; Section 5 reports empirical results and Section 6 concludes.
نتیجه گیری انگلیسی
Two contrasting theories exist in the literature regarding the role of financial liberalization on growth. For a long time economists have focused on the growth enhancing theory of financial liberalization motivated by the scholarly work of McKinnon (1973) and Shaw (1973), which promised to positively turn around previously financially repressed developing countries with liberalization. However, the counter theory alleges that financial liberalization can create an environment conducive for bank crises and volatility in the financial system that is unfriendly to economic growth. Considering that almost all Sub-Saharan African countries have liberalized the financial variables in their economy, this paper sought to establish whether this liberalization is growth enhancing or growth retarding. This study used two models, that is, a crisis model and a growth model. The crisis model was used to establish the relationship between bank crisis and liberalization. The results reveal that financial liberalization positively affects banking crisis implying that financial liberalization can potentially cause volatility in the financial system with possible negative growth implications. The growth model was used to capture the direct effect of both financial liberalization and bank crisis on economic growth. The results of the relationship between financial liberalization and growth are mixed and depend on the financial liberalization indicator used while the results of the linkage between banking crisis and growth clearly show a negative relationship. Based on these results, it can therefore be concluded that the growth retarding effects of financial liberalization on growth are dominant over the growth enhancing effects. The results support the conditional convergence hypothesis and this is consistent with expectations for low income countries such as Sub-Saharan African countries in the sample. The study also finds that high inflation slows growth and that financial liberalization reinforces the negative effects of inflation on growth. The study further finds that public expenditure in African countries is inefficient and therefore growth retarding. The level of education and institutional variables are also found to play a key role in growth. This study therefore makes four policy recommendations. First, this paper advocates for ‘managed financial openness’ policy rather than fullblast openness that ignores country characteristics and the possibilities of experiencing the growth retarding effects of such openness. Second, since institutional variables seem critical to economic growth, SSA countries should give priority to measures that strengthen institutions, particularly, reforms targeting elimination of corruption and increasing democratic space in this countries. Third, measures to increase literacy levels such as provision of free primary education can also enhance growth. Fourth, policies to reduce government inefficiencies are essential to save resources and play a complementary role to developmental aid.