Effects of International Financial Integration on Domestic Financial Development in Sub-Saharan African Countries

Abstract

This paper aims to analyze the effects of international financial integration on the development of domestic financial system in Sub-Saharan Africa, specifically the banking system over the period 2000-2015. The estimation of parameters by system GMM shows that international financial integration is beneficial to the activity and efficiency of the banking system. Moreover, we don’t find a breakdown in the relationship, considering only the post-financial crisis period. In addition, the withdrawal of South Africa and Mauritius due to their levels of international financial integration and domestic financial development cancels out the significant effect on the activity and efficiency of the banking system.

Keywords: International financial integration, domestic financial development, financial crisis, sub-Saharan Africa

DOI: 10.7176/JESD/10-18-03

Publication date:September 30^th 2019