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Financial Integration and Business Cycle Synchronization in Sub-Saharan Africa

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Uncertainty, Expectations and Asset Price Dynamics

Part of the book series: Dynamic Modeling and Econometrics in Economics and Finance ((DMEF,volume 24))

Abstract

This contribution studies the relationship between financial integration and the correlation of business cycles in sub-Saharan African countries. We consider asymmetric dynamics during expansions and recessions and desynchronized fluctuations that capture the costs and benefits of financial integration. Our study suggests that the effect of financial integration is heterogeneous across groups of countries. In the CEMAC, we find a positive relationship between financial integration and business cycles, while for WAEMU and SADC, financial integration increases the dephasing of business cycles. Further, reserve pooling does not play a substantial role in smoothing idiosyncratic shocks.

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Notes

  1. 1.

    See Kablan (2010).

  2. 2.

    See Monfort et al. (2013).

  3. 3.

    For recent applications to sub-Saharan African countries, see Coleman (2011), Hitaj et al. (2013), Mafusire and Brixiova (2013), and Ssozi (2011).

  4. 4.

    See Carmignani (2009) and Houssa (2008).

  5. 5.

    See Asdrubli et al. (1996), Brennan and Solnik (1989), and Sorensen and Yosha (1998) for the seminal papers.

  6. 6.

    See Nnyanzi (2013), Tapsoba (2009), and Yehoué (2011).

  7. 7.

    See Tapsoba (2009) and Wang et al. (2007).

  8. 8.

    For recent papers, see Tsangarides (2012).

  9. 9.

    The interested reader can refer to recently published papers on this topic (see, among others, Eggoh (2010), Fu-Sheng (2009), Hong-Chuan and Shu-Lin (2009), Maher (2012), and Masten et al. (2008).

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Author information

Authors and Affiliations

  1. Banque de France, Paris, France

    Julien Acalin, Bruno Cabrillac, Luc Jacolin & Samuel Diop

  2. Aix-Marseille School of Economics, Marseille, France

    Gilles Dufrénot

  3. CEPII, Paris, France

    Gilles Dufrénot

Authors
  1. Julien Acalin
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  2. Bruno Cabrillac
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  3. Gilles Dufrénot
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  4. Luc Jacolin
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  5. Samuel Diop
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Editor information

Editors and Affiliations

  1. Lille University, Lille Cedex, France

    Fredj Jawadi

Appendix

Appendix

Table 5 Convergence criteria in monetary unions projects in sub-Saharan Africa
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Acalin, J., Cabrillac, B., Dufrénot, G., Jacolin, L., Diop, S. (2018). Financial Integration and Business Cycle Synchronization in Sub-Saharan Africa. In: Jawadi, F. (eds) Uncertainty, Expectations and Asset Price Dynamics. Dynamic Modeling and Econometrics in Economics and Finance, vol 24. Springer, Cham. https://doi.org/10.1007/978-3-319-98714-9_6

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