Simplice A, Asongu (2011): Finance and democracy in Africa.
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The motivations of the Arab Spring and hitherto unanswered questions about some of its dynamics inspired this paper, which focuses on how democracy, polity and autocracy affect financial development dynamics of depth, efficiency, activity and size in Africa; contingent on religious-domination, income-levels and colonial-legacies. Findings could be summarized in the following. (1) Authoritarian regimes have a higher propensity to effect policies that favor the development of financial intermediary depth, activity and size. Democracy has important effects on the degree of competition for public offices but less significant effects in comparison with autocracy on policies towards financial development. (2) Christian-dominated countries have higher (lower) levels of financial intermediation efficiency (depth) than-Islam oriented countries. (3) Income-levels also matter in financial development as poor countries have a lower propensity to improve their financial dynamics than wealthy states. (4) On average English common-law countries have better democratic institutions that their French civil-law counterparts. (5) There is evidence of a U-shape relationship between national wealth and the level of democracy, with Low-income countries experiencing lower (higher) levels of democracy than Upper (Lower) middle income countries. As a policy implication, once democracy is initiated, it should be accelerated (to edge the appeals of authoritarian regimes) and reap the benefits of level and time hypotheses in financial development.
|Item Type:||MPRA Paper|
|Original Title:||Finance and democracy in Africa|
|Keywords:||Banking; Finance; Politics; Democracy; Development|
|Subjects:||O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O10 - General
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E40 - General
P - Economic Systems > P1 - Capitalist Systems > P16 - Political Economy
P - Economic Systems > P5 - Comparative Economic Systems > P50 - General
|Depositing User:||Simplice Anutechia Asongu|
|Date Deposited:||20. Dec 2011 21:29|
|Last Modified:||18. Feb 2013 03:24|
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