Financial Deepening in the CFA Franc Zone : The Role of Institutions

Author/Editor:

Dhaneshwar Ghura ; Kangni R Kpodar ; Raju J Singh

Publication Date:

May 1, 2009

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

During the 1980s and early 1990s many Sub-Saharan African (SSA) countries undertook reforms to promote financial sector deepening. Nevertheless, financial sectors in SSA countries remain among the shallowest in the world and, within Sub-Saharan Africa, financial depth in the CFA franc zone is even more limited. This paper sets out to investigate empirically factors that may explain why financial depth in the CFA franc zone is shallower than in the rest of SSA using panel data for a sample of 40 countries for 1992-2006. The results indicate that the gap in financial development between the CFA franc zone countries and the rest of SSA can be explained by differences in institutional quality (e.g., availability of credit information, and strength and enforcement of property rights), variables that policy makers can influence.

Series:

Working Paper No. 09/113

Subject:

English

Publication Date:

May 1, 2009

ISBN/ISSN:

9781451872606/1018-5941

Stock No:

WPIEA2009113

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

17

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