Grants, Remittances, and the Equilibrium Real Exchange Rate in Sub-Saharan African Countries

Download or read book Grants, Remittances, and the Equilibrium Real Exchange Rate in Sub-Saharan African Countries written by Brett Rayner and published by International Monetary Fund. This book was released on 2009-04 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the 1980s and early 1990s many Sub-Saharan African (SSA) countries undertook reforms to promote financial sector deepening. Nevertheless, financial sectors in SSA countries remain among the shallowest in the world and, within Sub-Saharan Africa, financial depth in the CFA franc zone is even more limited. This paper sets out to investigate empirically factors that may explain why financial depth in the CFA franc zone is shallower than in the rest of SSA using panel data for a sample of 40 countries for 1992-2006. The results indicate that the gap in financial development between the CFA franc zone countries and the rest of SSA can be explained by differences in institutional quality (e.g., availability of credit information, and strength and enforcement of property rights), variables that policy makers can influence.