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Four Instruments to Strengthen Financial Integration in Sub-Saharan Africa

Author

Listed:
  • Amadou SY

    (Africa Growth Initiative - Brookings Institution)

Abstract

This paper proposes four tools to strengthen financial integration in sub-Saharan Africa. The first tool, “political commitment devices” can ensure steady progress on the road to an economic community. For instance, stronger regional institutions can monitor progress towards integration and encourage policymakers to respect their regional commitments. Second, the economic benefits from financial integration are better secured when countries achieve a number of “threshold conditions,” including minimum levels of financial development and governance. Third, full financial integration requires the “trinity” of equality of access, rules, and treatment. Policymakers have to eliminate entry barriers, and once foreign institutions enter domestic markets, refrain from discriminating against them. In addition, policymakers must harmonize regulations further and build capacity, especially in banking supervision. Fourth, improving the “plumbing” of financial integration—financial infrastructure—by reducing transaction costs, can provide quick gains. Innovation in mobile payments can help reduce such costs, and regulators need to balance the associated benefits and risks.

Suggested Citation

  • Amadou SY, 2014. "Four Instruments to Strengthen Financial Integration in Sub-Saharan Africa," Working Papers P108, FERDI.
    • Handle: RePEc:fdi:wpaper:1647
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    References listed on IDEAS

    as
    1. AfDB AfDB, 2010. "Africa and Global Economic Trends Quarterly Review - First Quarter 2010," Africa and Global Economic Trends Quarterly Review 7, African Development Bank.
    2. A. Sy., 2014. "Four instruments to strengthen financial integration in sub-Saharan Africa," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 35, pages 75-95, autumn.
    3. AfDB AfDB, 2013. "Africa and Global Economic Trends Quarterly Review - Fourth Quarter 2012," Africa and Global Economic Trends Quarterly Review 450, African Development Bank.
    4. Amadou Sy, 2010. "Government Securities Markets in the West African Economic and Monetary Union: A Review," African Development Review, African Development Bank, vol. 22(2), pages 292-302.
    5. AfDB AfDB, 2013. "Africa and Global Economic Trends Quarterly Review - First Quarter 2013," Africa and Global Economic Trends Quarterly Review 475, African Development Bank.
    6. Lieven Baele, 2004. "Measuring European Financial Integration," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 20(4), pages 509-530, Winter.
    7. Mr. Amadou N Sy, 2006. "Financial Integration in the West African Economic and Monetary Union," IMF Working Papers 2006/214, International Monetary Fund.
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    Cited by:

    1. Zouri, Stéphane, 2019. "Business cycles,bilateral trade and international financial intergration : Evidence from Economic Community of West African States (ECOWAS)," MPRA Paper 98748, University Library of Munich, Germany.
    2. Matthew Oladapo Gidigbi & Benedict Akanegbu, 2017. "Does Financial Integration Exist in ECOWAS?," Journal of Social and Development Sciences, AMH International, vol. 8(2), pages 14-27.
    3. A. Sy., 2014. "Four instruments to strengthen financial integration in sub-Saharan Africa," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 35, pages 75-95, autumn.
    4. Léon, Florian, 2016. "Does the expansion of regional cross-border banks affect competition in Africa? Indirect evidence," Research in International Business and Finance, Elsevier, vol. 37(C), pages 66-77.
    5. Zouri, Stéphane, 2019. "Business cycles,bilateral trade and international financial intergration : Evidence from Economic Community of West African States (ECOWAS)," MPRA Paper 95275, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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