Vanessa Simen Tchamyou

Information Sharing and Financial Sector Development in Africa

ABSTRACT This study investigates the effect information sharing has on financial sector development in 53 African countries for the period 2004 to 2011. Information sharing is measured with private credit bureaus and public credit registries. Hitherto unexplored dimensions of financial sector development are employed, namely: financial sector dynamics of formalization, informalization, and non-formalization. The empirical evidence is based on Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM). The following findings are established. Information-sharing bureaus increase (reduce) formal (informal/non-formal) financial sector development. In order to ensure that information-sharing bureaus improve (decrease) formal (informal/non-formal) financial development, public credit registries should have between 45.45 and 50% coverage while private credit bureaus should have at least 26.25% coverage.

Education, Lifelong learning, Inequality and Financial access: Evidence from African countries

ABSTRACT This study investigates the role of financial access in modulating the effect of education and lifelong learning on inequality in 48 African countries for the period 1996–2014. Lifelong learning is conceived and measured as the combined knowledge gained from primary through tertiary education while the three educational indicators are: primary school enrolment; secondary school enrolment and tertiary school enrolment. Financial development dynamics are measured with financial system deposits (liquid liabilities), financial system activity (credit) and financial system efficiency (deposits/credit). Three measures of inequality are employed notably: the Gini coefficient; the Atkinson index and the Palma ratio. The estimation strategy is based on the generalised method of moments. The following findings are established. First, primary school enrolment interacts with all financial channels to exert negative effects on the Gini index. Second, lifelong learning has negative net effects on the Gini index through financial deposit and efficiency channels. Third, for the most part, the other educational levels do not significantly influence inequality through financial access channels. Policy implications are discussed.

Technology-Driven Information Sharing and Conditional Financial Development in Africa

ABSTRACT Information technology is increasingly facilitating mechanisms by which information asymmetry between lenders and borrowers in the financial sector can be reduced in order to enhance financial access for human and economic development in developing countries. We examine conditional financial development from ICT-driven information sharing in 53 African countries for the period 2004–2011, using contemporary and non-contemporary quantile regressions. ICT is measured with mobile phone penetration and internet penetration, whereas information-sharing offices are public credit registries and private credit bureaus. The following findings are established. First, there are positive effects with positive thresholds from ICT-driven information sharing on financial depth (money supply and liquid liabilities) and financial activity (at banking and financial system levels). Second, for financial intermediation efficiency, the positive effects from mobile-driven information sharing are apparent exclusively in certain levels of financial efficiency. Third, with regard to financial size, mobile-driven information sharing is positive with a negative threshold, whereas internet-driven information sharing is positive exclusively among countries in the bottom half of financial size. Positive thresholds are defined as decreasing negative or increasing positive estimated effects from information-sharing offices and vice versa for negative thresholds. Policy implications are discussed.

Fighting terrorism in Africa: Benchmarking policy harmonization

This study assesses the feasibility of policy harmonization in the fight against terrorism in 53 African countries with data for the period 1980–2012. Four terrorism variables are used, namely: domestic, transnational, unclear and total terrorism dynamics. The empirical evidence is based on absolute beta catch-up and sigma convergence estimation techniques. There is substantial absence of catch-up. The lowest rate of convergence in terrorism is in landlocked countries for regressions pertaining to unclear terrorism (3.43% per annum for 174.9 years) while the highest rate of convergence is in upper-middle-income countries in domestic terrorism regressions (15.33% per annum for 39.13 years). After comparing results from the two estimation techniques, it is apparent that in the contemporary era, countries with low levels of terrorism are not catching-up their counterparts with high levels of terrorism. As a policy implication, whereas some common policies may be feasibly adopted for the fight against terrorism, the findings based on the last periodic phase (2004–2012) are indicative that country-specific policies would better pay-off in the fight against terrorism than blanket common policies. Some suggestions of measures in fighting transnational terrorism have been discussed in the light of an anticipated surge in cross-national terrorism incidences in the coming years.

Information Sharing and Conditional Financial Development in Africa

This study examines conditional financial development from information sharing in 53 African countries for the period 2004-2011, using contemporary and non-contemporary quantile regressions (QR) which enable the assessment of the effect of information sharing throughout the conditional distributions of financial development dynamics. The policy relevance of the QR approach builds on the motivation that blanket policies on the role of information sharing in financial development may not be effective unless they are contingent on initial levels of financial development and tailored differently across countries with low, intermediate and high levels of financial development. Information sharing is measured with private credit bureaus (PCB) and public credit registries (PCR) while financial development is proxied with dynamics of depth, efficiency, activity and size. The following findings are established. First, for financial depth, while there is a positive threshold effect from PCR in money supply and liquid liabilities, the effect from PCB is mixed. Second, for financial efficiency, there is a: (i) contemporary positive threshold from PCR and mixed effect from PCB in banking system efficiency and (ii) U-shape and positive threshold from PCR and PCB respectively in financial system efficiency. Third, for financial activity, there are consistent positive thresholds from PCR and PCB in banking system activity and financial system activity. Fourth, there are negative thresholds from PCR and PCB in financial size. Positive thresholds are consistent incremental financial development rewards from PCR and/or PCB with increasing financial development and vice-versa for negative thresholds. Mixed effects are characterised by S-shaped, Kuznets or wave-like patterns. As a main policy implication, initial conditions in financial development are essential to materialise incremental benefits from PCR and PCB. Other policy implications are discussed.

Globalisation and Governance in Africa: A Critical Contribution to the Empirics

This study aims to assess the effect of globalisation on governance in 51 African countries for the period 1996-2011.,Ten bundled and unbundled governance indicators and four globalisation variables are used. The empirical evidence is based on Generalised Method of Moments.,Firstly, on political governance, while only social globalisation improves political stability, only economic globalisation does not increase voice and accountability and political governance. Secondly, with regard to economic governance: only economic globalisation significantly promotes regulation quality; social globalisation and general globalisation significantly advance government effectiveness; and economic globalisation and general globalisation significantly promote economic governance. Thirdly, with respect to institutional governance, while only social globalisation improves corruption-control, the effects of globalisation dynamics on the rule of law and institutional governance are not significant. Fourthly, the impacts of social globalisation and general globalisation are positive on general governance.,It follows that political governance is driven by voice and accountability compared to political stability; economic governance is promoted by both regulation quality and government effectiveness from specific globalisation angles; and globalisation does not improve institutional governance for the most part.,Governance variables are bundled and unbundled to reflect evolving conceptions and definitions of governance. Theoretical contributions and policy implications are discussed.

Human Capital, Knowledge Creation, Knowledge Diffusion, Institutions and Economic Incentives: South Korea versus Africa

ABSTRACT This article compares African countries to South Korea in terms of knowledge economy (KE). Emphasis is laid on human capital, knowledge creation, knowledge diffusion, institutions and economic incentives. The analytical approach consists of providing KE catch-up strategies that can be understood within the context of country-specific gaps between the frontier country in KE and laggard African countries. The empirical evidence is based on sigma convergence with data for the period 1996–2010. Overall, a KE diagnosis is provided by assessing KE gaps (between South Korea and specific-African countries) and suggesting compelling catch-up strategies with which to reduce identified gaps. Contemporary and non-contemporary policies from South Korea and more contemporary policies based on challenges of globalisation are discussed. The policy relevance of this inquiry aligns with the scholarly perspective that catch-up between South Korea and more advanced economies was accelerated by the former adapting to and assimilating relatively obsolete technological know-how from more developed nations.

Information Asymmetry and Financial Dollarization in Sub-Saharan Africa

Financial dollarization in Sub-Saharan Africa is the most persistent compared to other regions of the world. This study complements the existing scant literature on dollarization in Africa by assessing the role of information sharing offices (public credit registries and private credit bureaus) on financial dollarization in 26 countries of SSA for the period 2001-2012. The empirical evidence is based on Ordinary Least Squares (OLS) and Generalised Method of Moments (GMM). The findings show that information sharing offices (which are designed to reduce information asymmetry) in the banking industry are a deterrent to dollarization. Policy implications are discussed.

Inequality, Finance and Pro-Poor Investment in Africa

This study complements existing literature by investigating how investment-driven finance affects inequality in Africa. The empirical evidence is based on restricted and unrestricted Two-Stage Least Squares and a pre-crisis periodicity (1980-2002). Inequality is measured with estimated household income inequality whereas financial development is proxied with financial depth (money supply and liquid liabilities), financial efficiency (at banking and financial system levels), financial activity (from banking and financial system perspectives) and financial size. The findings show that with the exception of foreign investment, financial dynamics of depth, efficiency, activity and size enhance equalizing income-distribution through domestic, private and public investment channels. Policy implications are discussed with particular emphasis on improving inclusive development for the post-2015 sustainable development agenda. Notably, in the current transition from Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs), mobilizing domestic resources for investment purposes may have greater inclusive benefits than overly reliance on foreign sources of capital.

The Comparative African Regional Economics of Globalization in Financial Allocation Efficiency

The study assesses the role of globalization-fuelled regionalization policies on financial allocation efficiency in four economic and monetary regions in Africa for the period 1980 to 2008. Banking system and financial system efficiencies are used as dependent variables whereas seven bundled and unbundled globalization variables are employed as independent indicators. The bundling exercise is achieved by means of principal component analysis while the empirical evidence is based on interactive Fixed Effects regressions. The following findings are established. First, financial allocation efficiency is more sensitive to financial openness compared to trade openness and most sensitive to globalization. The relationship between allocation efficiency and globalization-fuelled regionalization policies is: (i) Kuznets or inverted U-shape in the UEMOA and CEMAC zones (evidence of decreasing returns to allocation efficiency from globalization-fuelled regionalization) and (ii) U-shape overwhelmingly in the COMESA and scantily in the EAC (increasing returns to allocation efficiency from globalization-fuelled regionalization). Established shapes are relevant to specific globalization dynamics within regions. ‘Economic and monetary’ regions are more prone to surplus liquidity than purely economic regions. Policy implications and measures of fighting surplus liquidity are discussed.