The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa

Abel Mawuko Agoba; Joshua Yindenaba Abor; Kofi Achampong Osei; Jarjisu Sa-Aadu

doi:10.1177/0972652719877474

The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa

Abel Mawuko Agoba
, Joshua Yindenaba Abor
, Kofi Achampong Osei
, Jarjisu Sa-Aadu

University of Ghana Business School
University of Iowa

Research output: Contribution to journal › Article › peer-review

18 Citations (Scopus)

Abstract

Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions.

Original language	English
Pages (from-to)	154-188
Number of pages	35
Journal	Journal of Emerging Market Finance
Volume	19
Issue number	2
DOIs	https://doi.org/10.1177/0972652719877474
Publication status	Published - 1 Aug 2020
Externally published	Yes

Keywords

Africa
Central bank independence
developing countries
emerging markets
financial development
institutional quality

Access to Document

10.1177/0972652719877474

Cite this

@article{7ccf87877dc84d14a4257665965299ce,

title = "The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa",

abstract = "Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions.",

keywords = "Africa, Central bank independence, developing countries, emerging markets, financial development, institutional quality",

author = "Agoba, \{Abel Mawuko\} and Abor, \{Joshua Yindenaba\} and Osei, \{Kofi Achampong\} and Jarjisu Sa-Aadu",

note = "Publisher Copyright: {\textcopyright} 2020 Institute of Financial Management and Research.",

year = "2020",

month = aug,

day = "1",

doi = "10.1177/0972652719877474",

language = "English",

volume = "19",

pages = "154--188",

journal = "Journal of Emerging Market Finance",

issn = "0972-6527",

publisher = "Sage Publications India Pvt. Ltd",

number = "2",

}

TY - JOUR

T1 - The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa

AU - Agoba, Abel Mawuko

AU - Abor, Joshua Yindenaba

AU - Osei, Kofi Achampong

AU - Sa-Aadu, Jarjisu

PY - 2020/8/1

Y1 - 2020/8/1

N2 - Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions.

AB - Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions.

KW - Africa

KW - Central bank independence

KW - developing countries

KW - emerging markets

KW - financial development

KW - institutional quality

UR - https://www.scopus.com/pages/publications/85078243252

U2 - 10.1177/0972652719877474

DO - 10.1177/0972652719877474

M3 - Article

AN - SCOPUS:85078243252

SN - 0972-6527

VL - 19

SP - 154

EP - 188

JO - Journal of Emerging Market Finance

JF - Journal of Emerging Market Finance

IS - 2

ER -

The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this