The impact of financial liberalization on financial sector performance evidence from selected Sub Saharan Africa countries

Abstract

This study analyzes the impact of financial liberalization on financial sector performance for selected sub Saharan Africa (SSA) countries using panel data for the period 1990 to 2006. The study employs econometric analysis in which the fixed effects (within) estimator of econometric modelling was adopted and applied. State 10 was used for econometric analysis. The econometric results of the study show that financial liberalization policies did not improve the performance of financial sector in selected SSA countries during the early years. However, with time financial liberalization policies seem to improve the performance of financial sector as the implementation of financial liberalization policies pass by. This might be linked to the initial design of financial liberalization policies in SSA countries. Hence, we recommend that policy makers require an accurate assessment of any new policy before implementing it. This could be done through a better legal system and institutions reforms.