Financial Reforms and Financial Development in Africa: Evidence from Selected SSA Countries

This chapter gives an overview of some key financial sector reforms that have been implemented in some sub-Saharan African (SSA) countries since the onset of the new orthodoxy of financial liberalisation in the 1980s. The chapter also examines trends of some financial sector indicators in selected countries since the 1990s. In order to evaluate financial sector development in SSA countries, both bank-based and market-based financial sector indicators have been explored. Some of the financial sector indicators that have been reviewed in this chapter include interest rate spreads, financial deepening, bank asset concentration and stock market development. The selection of countries used in the analysis is mainly based on availability of data for the various indicators and sample period. Our findings show that: (i) interest rate spreads increased during the post-financial reform period in many countries, but later decreased significantly, especially during the period 2011-2020; (ii) bank concentration ratio increased in some countries after financial reforms, but decreased in other countries; and iii) stock markets have grown in size in some countries after financial reforms, but the financial sectors of many countries (with the exception of South Africa) are still dominated by banks and financial intermediaries.