The push for financial inclusion in Africa: Should central banks be wary of political institutional quality and literacy rates?

Abel Mawuko Agoba, Yakubu Awudu Sare, Ebenezer Bugri Anarfo, Christian Tsekpoe

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)
102 Downloads (Pure)

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 languageEnglish
Pages (from-to)114-136
Number of pages23
JournalPolitics and Policy
Volume51
Issue number1
Early online date12 Jan 2023
DOIs
Publication statusPublished - 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

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