Regional Financial Integration and Inclusive Growth in African Franc Zone Countries

Description

The aim of this Book is to empirically determine the impact of regional financial integration on inclusive growth for the 15 African countries in the franc zone. In order to do so, we first construct a methodological index of inclusive growth that takes into account the informal sector by adopting the principle of principal component analysis and the technique of calculating composite indices. Then, using recent econometric developments such as cointegration tests, ordinary least squares (OLS) and double least squares, we establish the impact of RFI on this index of inclusive growth between 1995 and 2015. The main results show that the weak financial integration of African countries in the franc zone has a negative impact on inclusive growth. However, we note that, when governments are effective, financial integration can foster inclusive growth. These results therefore constitute a major basis for public authorities to ensure not only that financial integration is improved, but also that it is also a means of promoting inclusive growth.