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Financial market fragmentation and reforms in Ghana, Malawi, Nigeria, and Tanzania (Inglês)

This article reports the findings from surveys of formal and informal institutions and their clients in Ghana, Malawi, Nigeria, and Tanzania. It investigates the hypothesis 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 four countries have substantially fragmented financial markets, with weak linkages between formal and informal segments and interest rate differentials that cannot be adequately explained by differences in costs and risks. Nevertheless, the relatively low transaction costs and loan losses of informal institutions indicate that they provide a reasonably efficient solution to information, transaction cost, and enforcement problems that exclude their clients from access to formal banking services. The findings imply that financial liberalization and bank restructuring in the African context should be accompanied by complementary measures to address institutional and structural problems, such as contract enforcement and information availability, and to improve the integration of informal and formal financial markets.


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    Aryeetey, Ernest Hettige, Hemamala Nissanke, Machiko Steel, William

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  • Nome do documento

    Financial market fragmentation and reforms in Ghana, Malawi, Nigeria, and Tanzania

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    survey sample;financial market;transaction cost;financial system;informal lender;informal financial institution;access to formal finance;Rotating Savings and Credit;Savings and Credit Cooperative;deregulation of interest rate;excess demand for credit;financial sector reform;contract enforcement;impact of policy reforms;access to financial service;Legal and Judicial Reform;lending rate spread;Savings and Credit Association;currency in circulation;cost of fund;financial deepening;formal financial sector;informal sector;formal financial market;high reserve requirement;interest rate ceiling;informal finance;small-scale enterprise;credit union;interest rate differential;flow of fund;demand for money;formal financial system;risk of default;imperfect information;demand deposit;commercial bank;financial market authority;adequate regulatory framework;local monopoly power;indigenous private sector;access to bank;private sector finance;reliance on collateral;difference in returns;foreclosure on collateral;Public Enterprise Reform;credit from banks;small financial transaction;loan approval rate;interest rate decline;demand for fund;nominal lending rate;prevailing interest rate;financial sector development;portfolio of bank;case of default;expansion of demand;commercial bank lending;share of credit;private sector lending;private sector share;real interest rate;implementation of reform;flow of information;formal banking system;volume of deposit;gross domestic product;informal financial market;liberalization of interest;access to finance;liabilities of bank;small enterprise sector;benefits of regulation;impact on market;interest rate range;financial liberalization;financial repression;informal markets;loan company;credit allocation;financial policies;banking institution;savings deposit;default rate;large enterprise;money supply;deposit rate;financial reform;market niche;financial intermediation;nonperforming loan;rural bank;opportunity cost;Learning and Innovation Credit;supervisory framework;survey results;government control;market segment;bank portfolio;financial flow;capital base;survey data;excess liquidity;comparative advantage;rural area;high spread;financial intermediaries;financial depth;complementary measure;legal system;



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