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This paper investigates whether financial sector development promotes economic globalization (EG) using data from 45 African countries.

Using panel data of the selected African countries, the two-step system generalized method of moments estimation technique which is capable of solving any possible endogeneity problem is employed for the empirical analysis.

The main finding is that all measures of financial sector development have a significant positive impact on EG in Africa. The results suggest that improving the financial sector development in a holistic manner is key in fostering EG in Africa.

This present paper uses broader measures of EG and financial sector development. Using broader measures of these variables widens the policy scope in terms of policy adoption and implementation.

This paper examines the effectiveness of the joint impact of convergence policy measures on macroeconomic stability conditions in the West African monetary zone (WAMZ) countries, using an annual panel data from 1990 to 2021.

It uses the dynamic autoregressive distributed lag (ARDL) approach to exploit the short and long run dynamics macro stability. A composite convergence index was constructed and its impact was examined on three different macroeconomic stability measures representing: internal stability, external stability and overall stability.

Findings from the study suggest that a unit deviation of the convergence policy index from its mean, in the short run, leads to worsening external and overall macroeconomic stability conditions in the zone, but it leads to improvement in the internal macroeconomic stability conditions. However, in the long run, the opposite occurs, a unit deviation of the convergence policy index from its mean, it leads to improvement in both external and overall macroeconomic stability situations and deterioration in internal macroeconomic stability situation.

It is concluded that the convergence policy criteria are effective only in the long run and therefore these policies alone cannot be used to achieve short run macroeconomic stability within the zone. Thus, policymakers should have a second look at how fiscal and monetary policies are conducted and also work to address structural challenges.

The paper examines the effectiveness of the joint impact of convergence policy measures on macroeconomic stability conditions in the WAMZ countries.

This paper examines correlations of the underlying structural shocks and the degree of synchronization in the impulse responses of output, inflation and trade to a one standard deviation shock to non-oil commodities price index and exchange rates within the West African Monetary Zone (WAMZ) countries from 1990q1 to 2020q1.

This paper uses the structural vector autoregressive model to isolate the underlying structural shocks and compares them with the West African Monetary Union (WAEMU) countries.

Findings from the study suggest that correlations of underlying structural shocks are more profound in the WAEMU than in the WAMZ. Impulse responses of output to price and exchange rate shocks are more symmetric in the WAEMU than in the WAMZ. However, impulse responses of inflation to price and exchange rate shocks are symmetric in the WAMZ than in the WAEMU and responses of trade in both sub-groups are not uniform.

The paper concludes that the WAMZ does not constitute an Optimum Currency Area concerning the correlations of the structural shocks and output. However, it has achieved convergence in inflation and there are adequate adjustment mechanisms to shocks in the WAMZ than in the WAEMU. Therefore, the WAMZ may not suffer from joining the monetary union. Thus, economic Community of West African States may take steps to roll out the monetary union.

The paper examines correlations of the underlying structural shocks, impulse responses of output and inflation to shocks to commodities price and exchange rates in the WAMZ and compares them with the WAEMU.

This paper explores the implications of financial inclusion and financial development for the conduct of monetary policy in achieving price stability and economic growth in sub-Saharan Africa (SSA).

The paper employs the system-generalized methods of moment (GMM) estimation technique using panel data spanning 2004 to 2019 and sourced from Databases of (International Monetary Fund's) IMF's Financial Access Survey (FAS), IMF's International Financial Statistics (IFS), World Bank's Global Financial Development Database (GFDD) and World Bank's World Development Indicators (WDI).

The authors find that financial inclusion has a double-edge effect in SSA. That is, it increases economic growth and lowers inflation in SSA. Furthermore, the results show that a simultaneous increase in financial inclusion and financial development have restrictive effects on economic growth. On the evidence provided, the authors conclude that financial inclusion is an important predictor of economic growth and the conduct of monetary policy in the sub-region.

This paper expands and contributes to the frontier of knowledge how financial inclusion is important for the conduct of monetary policy by monetary authorities in achieving its intended objectives in SSA. The paper highlights the need for ongoing enhancement of financial inclusion of many governments in the sub-region to achieving high economic growth and price stability. Thus, there is the need for policy makers to ensure that a more stringent, effective and appropriate policies and measures are put in place to enhance financial inclusion while taking into consideration the extent of financial development in SSA.

The purpose of this paper is to examine macroeconomic determinants of interest rate spreads in Ghana for the period 1980-2013.

The autoregressive distributed lag bounds test approach to cointegration and the error correction model were used for the estimation.

The results indicate that exchange rate volatility, fiscal deficit, economic growth, and public sector borrowing from commercial banks, increase interest rate spreads in Ghana in both the long and short run. Institutional quality reduces interest rate spreads in the long run while lending interest rate volatility and monetary policy rate reduce interest rate spreads in the short run.

The depreciation of the Ghana cedi must be controlled since its volatility increases spreads. There is a need for fiscal discipline since fiscal deficits increase interest rate spreads. Government must reduce its domestic borrowing because the associated crowding-out effect increases interest rate spreads. The central bank must improve its monitoring and regulation of the financial sector in order to reduce spreads.

The main novelty of the paper (compared to other studies on Ghana) lies on the one hand; analysing macroeconomic determinants of interest rate spreads and, on the other hand, controlling for the impact of institutional quality on interest rate spreads in Ghana.

The purpose of this paper is to explore the landscape of financial services in Africa through the prism of a selection of research papers.

This is a review of literature that focusses on access to financial services (i.e. financial inclusion) and empirical findings from research papers in this issue of the journal.

The landscape of financial services in Africa is as heterogeneous as the countries comprising the continent. Common features include low levels of financial inclusion, low financial literacy, constrained access to credit, costly credit when available, gender discrimination in account ownership, and use and inefficient foreign exchange markets. Nevertheless, there are promising innovations, especially the mobile money innovation, which have the potential to foster more inclusive financial systems.

All the papers in this volume are based on original research shedding new insights on various aspects of financial services in Africa.

African Economies are a mix of emerging and developing economies, characterised by regional imbalances and socio-economic differences. Foreign Direct Investment and Trade has been important for the growth prospects of African Economies. In this paper, we attempt to study the impact of FDI and Trade in a COVID-19 scenario on the African Economies. We also study the lockdown restrictions in different regions of Africa. Applying Neural Network Analysis for the sample of 36 African Economies we identify the significant economic variables for GDP. The analysis based on a feedforward structure suggests that Merchandize Exports (MEXP) and Foreign Direct Investment Stock (FDIS) have very strong causal linkages with the GDP for African Economies sample. On the other hand, Merchandise Imports (MIMP), Services Exports (SEMP), Services Imports (SIMP), and Foreign Direct Investment Inflows (FDII) have a strong and significant relationship with GDP for the African Economies. Tariff Measures (TRFF), Anti-Dumping measures (ADP) and Foreign Direct Investment Outflows (FDIO) have no significant relationship.

This study aims to assess the impact of foreign direct investment (FDI) on growth in presence of host country characteristics, namely, economic stability, human capital, financial development and trade openness, in the fastest emerging Brazil, Russia, India, China, South Africa (BRICS) economies, considered to be significant FDI destinations.

The panel data for the variables under study, collected from World Investment Reports published by World Bank, are analyzed using feasible generalized least squares method to examine the relationship between the dependent and explanatory variables over the period 1987–2018. The interaction effect has been studied to examine the growth impact of FDI in presence of host country characteristics.

The findings revealed that FDI does not exert a significant impact on the economic growth of BRICS individually but has a significant growth impact only in presence of host country characteristics. FDI on interacting with financial development, trade openness and human capital exerts a positive impact on the economic growth of BRICS economies, and on interacting with economic instability (inflation), FDI has a negative impact on growth.

The study has implications for policy makers of BRICS countries who are suggested to work toward the development of financial markets, trade liberalization and human capital development to realize the positive growth impact of FDI.

Very few studies have been conducted to examine the growth effect of FDI in BRICS economies, which are considered to be the fastest-growing economies and dominant players in the global investment landscape. Assessing the interaction of FDI with absorptive capacities/host country characteristics to study its growth impact in BRICS using long data and robust panel data methodology is an original contribution of this paper toward the existing body of knowledge.

It has been already established that the countries that have opened their economies in advance have reaped more benefits compared to those who have done it late. For example, the countries of the West are far away from the countries of the East in terms of the per capita incomes as because, besides others, the magnitudes of trade openness of the former are higher compared to that of the latter. Besides countries, there are some economic groups such as European Union, Organization of Economic Cooperation and Development (OECD), etc. who have proved the similar growth impacts of trade. There is another group of highly developing economies, with the acronym of BRICS (Brazil, Russia, India, China and South Africa), which has proved as being highly beneficiaries of the trade liberalisation. But the magnitudes of trade openness and their impacts in these countries are subject to further explorations using modern data. The present chapter aims to compute trade openness using two different methods for the BRICS countries and make association of it with growth and foreign currency reserves (FCRs) for the period 1991–2019. In addition, the study examines whether the FCR is sustainable. It observes positive and negative correlations between economic openness and gross domestic product (GDP) growth and FCR in the member nations leading to mean that trade openness has definitely contributed to the growth as well as accumulation of FCRs. But, the trends in the FCRs are unsustainable in the BRICS nations.

This paper seeks to examine the interrelationship between inclusive business, private sector credit and economic welfare in Africa.

The study uses the seemingly unrelated regression, system generalized method of moments and bootstrap quantile regression in a panel of 54 economies in Africa, over the period 2006–2020.

The authors show that countries that provide more credit to the private sector have better incentives to enhance the ease of doing business. The authors find that ease of doing business and domestic credit to the private sector have a positive and significant effect on economic welfare at higher quantile levels. The authors find that ease of doing business substitutes private sector credit to boost economic welfare, while business account complements private sector credit to boost economic welfare. The authors show that the marginal effect of inclusive business on economic welfare is greater in countries that provide more credit to the private sector.

The implication is that countries that focus on developing their private sector (through credit expansion) should be able to encourage or facilitate the inclusion of businesses to achieve a sustainable economic welfare.

The implication is that policymakers should be able to develop their business environment through inclusive financing so as to build business confidence in the society.

The paper examines the interrelationship between inclusive business, private sector credit and economic welfare in Africa.