Abstract
Motivated by the literature on reform complementarities and their importance for the effectiveness of central bank independence (CBI) reforms—particularly for African countries—where CBI has empirically not been found to have a significant impact on financial development, we explore the extent to which differences in literacy levels and political institutions could determine the extent and impact of CBI on financial inclusion. Using panel data from 2004 to 2014, we find that, while CBI does not promote financial inclusion in Africa, financial literacy and political institutions do; even to the extent of enabling CBI's impact on financial inclusion. The results are robust to different measures of political institutions from Freedom House and Polity IV Database and present implications for the role governments could play in shepherding central banks in Africa in the midst of Africa's developmental challenges and the global crises.
| Original language | English |
|---|---|
| Pages (from-to) | 114-136 |
| Number of pages | 23 |
| Journal | Politics and Policy |
| Volume | 51 |
| Issue number | 1 |
| Early online date | 12 Jan 2023 |
| DOIs | |
| Publication status | Published - Feb 2023 |
Bibliographical note
© 2023 The Authors. Politics & Policy published by Wiley Periodicals LLC on behalf of Policy Studies Organization.This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. (CC BY)
Keywords
- Africa
- African development
- CBI
- central bank independence
- central banks
- financial inclusion
- literacy rates
- political economy
- political institutions
