Financial Market Fragmentation and Reforms in Sub-Saharan Africa (World Bank Technical Paper) - Softcover

Hettige, Hemamala; Nissanke, Machiko; Steel, William

9780821338612: Financial Market Fragmentation and Reforms in Sub-Saharan Africa (World Bank Technical Paper)

Softcover

ISBN 10: 0821338617 ISBN 13: 9780821338612

Publisher: World Bank, 1997

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This paper reports findings from surveys of formal and informal institutions and their clients in Ghana, Malawi, Nigeria, and Tanzania to test hypotheses explaining different aspects of fragmentation -which occurs when different market segments are poorly linked and interest rate differentials cannot be fully explained by differences in costs and risks. A central hypothesis this report expresses is that reforming financially repressive policies would not be sufficient to overcome fragmentation of financial markets because of structural and institutional barriers to interactions across different market segments. The study concludes that financial development strategies, and World Bank operations suporting them, should explicitly include informal and semi-formal financial institutions and attempt to reduce structural impediments, foster greater interaction between (and within) market segments, and increase client access to them. This integration would allow different types of institutions to specialize efficiently for different segments, an extension and improvement of financial intermediation in the medium term.

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