Issue

Vol. 5 No. 7 (2022): American Journal of Economics and Business Management

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

The Effect of Trilemma Index on Financial Market Efficiency and Access: Evidence from Africa

https://doi.org/10.31150/ajebm.v5i7.1320
Yves Claude Nshimiyimana
A University of Lay Adventists of Kigali, Department of Finance, RWANDA
Dr. Ricardo Saavedra
Universidad Azteca (Azteca University), Director & Chair International Programs, MEXICO

Corresponding Author(s) : Yves Claude Nshimiyimana

Nshimiyimana@gmail.co

American Journal of Economics and Business Management, Vol. 5 No. 7 (2022): American Journal of Economics and Business Management

Abstract

The author examined the effects of the trilemma index on financial market development from thirty-eight (38) African national economies as a result of capital market globalization that has compelled many countries to open their financial markets in anticipation of the foreign investment required to improve market liquidity. The author indicated that the interaction of monetary independence and exchange rate stability affects both financial market depth and access in Africa negatively. The interaction of monetary independence (MI) and financial openness significantly affected financial market access in Africa. The author also found out that the interaction of the financial openness index and exchange rate stability significantly affected financial market access in Africa. The author concluded that county financial openness is the best tool for financial market access and efficiency in African markets.

Keywords

Financial Africa Market
Nshimiyimana, Y. C., & Saavedra, D. R. (2022). The Effect of Trilemma Index on Financial Market Efficiency and Access: Evidence from Africa. American Journal of Economics and Business Management, 5(7), 117–136. https://doi.org/10.31150/ajebm.v5i7.1320
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX
References
  1. Aizenman, J. (2019). International Reserves, Exchange Rates, and Monetary Policy: From the Trilemma to the Quadrilemma. In Oxford Research Encyclopedia of Economics and Finance. https://doi.org/10.1093/acrefore/9780190625979.013.313
  2. Aizenman, J., Chinn, M. D., & Ito, H. (2008). Assessing the Emerging Global Financial Architecture: Measuring the Trilemma’s Configurations over Time.
  3. Allen, F., Carletti, E., Cull, R., Qian, J., Senbet, L., & Valenzuela, P. (2012). Resolving the African Financial Development Gap: Cross-Country Comparisons and a Within-Country Study of Kenya. NBER Chapters.
  4. Allen, F., Demirguc-Kunt, A., Klapper, L., & Martinez Peria, M. S. (2016). The foundations of financial inclusion: Understanding ownership and use of formal accounts. Journal of Financial Intermediation, 27. https://doi.org/10.1016/j.jfi.2015.12.003
  5. Allen, F., & Gale, D. (1999). Bubbles, crises, and policy. Oxford Review of Economic Policy, 15(3). https://doi.org/10.1093/oxrep/15.3.9
  6. Allen, F., Otchere, I., & Senbet, L. W. (2011). ARTICLE IN PRESS +Model African financial systems: A review. Review of Development Finance. https://doi.org/10.1016/j.rdf.2011.03.003
  7. Baldwin, R. E., & Forslid, R. (1999). Incremental trade policy and endogenous growth:: A q-theory approach. Journal of Economic Dynamics and Control, 23(5–6). https://doi.org/10.1016/s0165-1889(98)00044-x
  8. Baldwin, R. E., & Forslid, R. (2000). Trade liberalisation and endogenous growth a q-theory approach. Journal of International Economics, 50(2). https://doi.org/10.1016/S0022-1996(99)00008-2
  9. Baxter, M., & Stockman, A. C. (1989). Business cycles and the exchange-rate regime. Some international evidence. Journal of Monetary Economics, 23(3). https://doi.org/10.1016/0304-3932(89)90039-1
  10. Bergh, A., & Nilsson, T. (2010). Do liberalization and globalization increase income inequality? European Journal of Political Economy, 26(4). https://doi.org/10.1016/j.ejpoleco.2010.03.002
  11. Bremus, F., & Buch, C. M. (2017). Granularity in banking and growth: Does financial openness matter? Journal of Banking and Finance, 77, 300–316. https://doi.org/10.1016/J.JBANKFIN.2016.04.023
  12. Carvalho, L., Diniz, A., Pedrosa, Í., & Rossi, P. (2016). Fiscal costs of monetary policy: Indirect effects of an interest rate shock on Brazilian public net debt. Revista de Economia Politica, 36(3). https://doi.org/10.1590/0101-31572015v36n03a06
  13. Cubillas, E., & González, F. (2014). Financial liberalization and bank risk-taking: International evidence. Journal of Financial Stability, 11, 32–48. https://doi.org/10.1016/j.jfs.2013.11.001
  14. Garber, P. M., & Svensson, L. E. O. (1995). The operation and collapse of fixed exchange rate regimes. In Handbook of International Economics (Vol. 3, Issue C). https://doi.org/10.1016/S1573-4404(05)80016-4
  15. Habib, M. M., Mileva, E., & Stracca, L. (2017). The real exchange rate and economic growth: Revisiting the case using external instruments. Journal of International Money and Finance, 73. https://doi.org/10.1016/j.jimonfin.2017.02.014
  16. Husain, A. M., Mody, A., & Rogoff, K. S. (2005). Exchange rate regime durability and performance in developing versus advanced economies. Journal of Monetary Economics, 52(1). https://doi.org/10.1016/j.jmoneco.2004.07.001
  17. Imbs, J. (2007). Tornell and Westermann, boom–bust cycles and financial liberalization. Journal of International Economics, 71(2). https://doi.org/10.1016/j.jinteco.2006.09.002
  18. Köhler, H. (2002). Working for a Better Globalization. In Conference on Humanizing the Global Economy.
  19. Kose, M. A., Prasad, E. S., & Terrones, M. E. (2011). Does Openness to International Financial Flows Contribute to Productivity Growth? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1167788
  20. Kose, Prasad, E. S., & Terrones, M. E. (2009). Does openness to international financial flows raise productivity growth? Journal of International Money and Finance, 28(4). https://doi.org/10.1016/j.jimonfin.2009.01.005
  21. Kose, Prasad, E. S., & Terrones, M. E. (2021). Does Openness to International Financial Flows Raise Productivity Growth? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1316710
  22. Lee, C. H., & Chou, P. I. (2018). Financial openness and market liquidity in emerging markets. Finance Research Letters, 25. https://doi.org/10.1016/j.frl.2017.10.024
  23. Levine, R., & Zervos, S. (1996). Stock market development and long-run growth. World Bank Economic Review, 10(2). https://doi.org/10.1093/wber/10.2.323
  24. Luo, Y., Tanna, S., & de Vita, G. (2016). Financial openness, risk and bank efficiency: Cross-country evidence. Journal of Financial Stability, 24, 132–148. https://doi.org/10.1016/J.JFS.2016.05.003
  25. Mishkin, F. S. (2009). Globalization, macroeconomic performance, and monetary policy. Journal of Money, Credit and Banking, 41(SUPPL. 1). https://doi.org/10.1111/j.1538-4616.2008.00204.x
  26. Mundell, R. A. (1963). Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates. In Science politique (Vol. 29, Issue 4).
  27. Osinubi, T. S., & Amaghionyeodiwe, L. A. (2003). Stock market development and long-run growth in Nigeria. Journal of African Business, 4(3). https://doi.org/10.1300/J156v04n03_06
  28. Prasad, E. S., Terrones, M. E., & Kose, M. A. (2011). Does Openness to International Financial Flows Raise Productivity Growth? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1331615
  29. Qamruzzaman, M., & Wei, J. (2018). Financial innovation, stock market development, and economic growth: An application of ARDL model. International Journal of Financial Studies, 6(3). https://doi.org/10.3390/ijfs6030069
  30. Ramirez, M. D. (2007). Boom-Bust Cycles and Financial Liberalization. Eastern Economic Journal, 33(4). https://doi.org/10.1057/eej.2007.43
  31. Rey, H. (2013). Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence, London Business School, CEPR. Federal Reserve Bank of Kansas City Economic Policy Symposium.
  32. Rodriguez, C. M. (2017). The growth effects of financial openness and exchange rates. International Review of Economics and Finance, 48. https://doi.org/10.1016/j.iref.2016.12.015
  33. Schneider, M., & Tornell, A. (2004). Balance Sheet Effects, Bailout Guarantees and Financial Crises. In Review of Economic Studies (Vol. 71).
  34. Svirydzenka, K. (2016). Introducing a New Broad-based Index of Financial Development Introducing a New Broad-based Index of Financial Development 1 Prepared by Katsiaryna Svirydzenka.
  35. Tornell, A., Westermann, F., & Martinez Trigueros, L. (2021). The Positive Link between Financial Liberalization, Growth and Crises. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.528225
  36. Woodford, M. (2013). Globalization and Monetary Control. In International Dimensions of Monetary Policy. https://doi.org/10.7208/chicago/9780226278872.003.0002
Read More
Author biographies is not available.
Download this PDF file
VIEW ARTICLE
Statistic
Read Counter : 62 Download : 75

Downloads

Download data is not yet available.