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

18 Pages Posted: 8 Jun 2009

See all articles by Raju Singh

Raju Singh

International Monetary Fund (IMF)

Kangni Kpodar

International Monetary Fund (IMF)

Dhaneshwar Ghura

International Monetary Fund (IMF)

Date Written: May 2009

Abstract

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.

Keywords: Credit policy, Cross country analysis, Currencies, Economic models, Financial sector, Governance, Private sector, Sub-Saharan Africa

Suggested Citation

Singh, Raju and Kpodar, Kangni and Ghura, Dhaneshwar, Financial Deepening in the CFA Franc Zone: The Role of Institutions (May 2009). IMF Working Paper No. 09/113, Available at SSRN: https://ssrn.com/abstract=1415170

Raju Singh

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Kangni Kpodar (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Dhaneshwar Ghura

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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