Botswana Journal of

  • Abbreviation: Botswana J. Econ.
  • Language: English
  • ISSN: 1810-0163
  • DOI: 10.5897/BOJE
  • Start Year: 2011
  • Published Articles: 38

Full Length Research Paper

The Response of Banking Sector Development to Financial and Trade Openness in the Presence of Global Financial Crisis in Africa

Onanuga Olaroke Toyin and Onanuga Abayomi Toyin
Department of Accounting & Banking and Finance Faculty of Social and Management Science Olabisi Onabanjo University P.M.B. 2002, Ago-Iwoye, Ogun state, Nigeria.
Email: [email protected]

  • Article Number - 9EA233168259
  • Vol.14(1), pp. 93-117 , August 2016
  •  Received: 06 October 2016
  •  Published: 12 August 2016


Africa’s financial system is strongly bank-based and so this paper investigate whether economic growth, financial openness and trade openness contribute to the development of the banking sector in the presence and absence of global financial crisis. The results from PMG/ARDL suggest that banking sector develops independently of economic growth in lower-middle and high income countries while it develops as demand for finance increases in low and uppermiddle income countries in Africa. Being cautious of global financial crisis, trade openness is found to be more effective in high and lower-middle income countries, financial openness is more effective in low income countries and neither is more effective in upper-middle income
countries. It is also discovered that, in the long run, global financial crisis generally reduce banking sector development in Africa but not in high income countries however the banking sectors of lower-middle and low income countries suffer the most from such crisis.
Keywords: Financial Openness, Trade Openness, Banking Sector Development, Global
Financial Crisis, Africa, Income group