Globalization and Financial Development in Africa

Abstract

Objective: Given the relevance of globalization on the integration of a country to the global economy and financial development, it is important to investigate the concept of globalization and evaluating the relationship between their determinants. Method: this study adopts qualitative techniques to examine the conceptual inter-relationship and the theoretical and empirical analysis of globalization and financial development from 2013 to 2023 using groupings based on the findings from the various samples articles that met the selection criteria of the dimensions of the concepts. On the other hand, this study adopts quantitative techniques to examine the relationship and causal effects of globalization dimension on financial development using some selected economies (developed and developing) for a period of 5 years (i.e. 2017 – 2021). Results: The finding of this study reveals that several studies have been conducted in relation to globalization and financial development, but at a decreasing rate which is against the expected results. Also, despite the increasing role of socio-economic variables of international crises, exchange rate and interest rate in financial development of economies, majority of the literatures have not shown sufficient interest as the few available reveal inconsistence in the relationship and causal effects of the variables. However, empirically, this study reveals that foreign direct investment, trade openness, exchange rate and interest rate but international crises have causal effect on financial development. Conclusion: This study therefore concludes that despite there are no convenient and consistent understandings, globalization has effect on financial development.