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Currency substitution in selected African countries

Author

Listed:
  • Assandé Désiré Adom
  • Subhash C. Sharma
  • A.K.M. Mahbub Morshed

Abstract

Purpose - This paper aims to investigate the presence of currency substitution in eight African countries. Design/methodology/approach - This study investigates the presence of currency substitution in eight African countries – Egypt, Morocco, Nigeria, Ghana, Kenya, South Africa, Tunisia and Zambia – for the period 1976 to 2005 using both regional and US dollar as anchor currencies. Findings - The paper finds that currency substitution is prevalent in Ghana and Nigeria when CFA franc is used as an anchor currency. However, when US dollar is used as an anchor currency there is no evidence of currency substitution in Ghana, but the presence of currency substitution in Nigeria is still observed. The paper also finds the presence of currency substitution in South Africa, but not in Egypt when the US dollar is the anchor currency. For Kenya, Tunisia and Zambia there is no evidence of currency substitution irrespective of the anchor currencies considered. In the case of Morocco, no evidence of currency substitution is observed when the Egyptian pound is used as anchor currency, but there is weak evidence of currency substitution when the US dollar is considered. Originality/value - This paper provides useful information on the presence of currency substitution in African countries.

Suggested Citation

  • Assandé Désiré Adom & Subhash C. Sharma & A.K.M. Mahbub Morshed, 2009. "Currency substitution in selected African countries," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 36(6), pages 616-640, October.
    • Handle: RePEc:eme:jespps:v:36:y:2009:i:6:p:616-640
    DOI: 10.1108/01443580911001760
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    Citations

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    Cited by:

    1. Moses C. Kiptui, 2014. "Some Empirical Evidence on the Stability of Money Demand in Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 849-858.
    2. Rasaki, Mutiu Gbade & Malikane, Christopher, 2015. "Macroeconomic shocks and fluctuations in African economies," Economic Systems, Elsevier, vol. 39(4), pages 675-696.

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