Financial System and Economic Development in Africa: A Review and Policy Recommendations
International Journal of Academic Research in Accounting, Finance and Management Sciences
This paper gears towards expounding the role, capacity, suitability, challenges and solutions for African financial systems in enhancing economic growth. This article employs a quasi-meta-analysis method of literature where an online search of materials related to the field of financial system and economic development were visited. Several journal publishers were included in finding the materials for this review. Search words and synonyms were used in the search processes, the reviewed papers
... e reviewed papers were used in discussing the related issues in the topic. It shows that, both theoretically and empirically, a financial system in an economy facilitates the following roles: first, it enables transfer of resources through time, across borders and among economic entities. Second, it facilitates mobilization and pooling of savings. Third, it facilitates the allocation of capital competitively. The reviewed evidences show that, Africa's financial systems have this functionality potential if there will be among others; liberalization of economies, strengthening of legal framework and expansion of tax and investor bases. The African situation needs to seek innovative financial products such as Islamic bonds, sovereign bonds and diaspora bonds. Empower local/municipal governments' role in raising finance through municipal bonds. Discharge differential financial policies to suit characteristics of the African populations. Implement agenda on ICT, information sharing, and sensitization on savings and promote financial inclusion at all levels of financial intermediation. This article attempts to deduce from empirical evidences specific implications and link them to both policy and practical realities for the linkage between financial development and economic development in the African experiences. No prior article has attempted to look at this issue in this light within the African context.