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| Title: | Informal Financial Markets under Liberalization in Four African Countries |
| Authors: | Steel, William F. Aryeetey, Ernest Hettige, Hemamala Nissanke, Machiko |
| Year: | 1997 |
| Periodical: | World Development |
| Volume: | 25 |
| Issue: | 5 |
| Period: | May |
| Pages: | 817-830 |
| Language: | English |
| Geographic terms: | Ghana Nigeria Tanzania Malawi |
| Subjects: | finance informal sector financial policy Economics and Trade Development and Technology Politics and Government |
| External link: | https://doi.org/10.1016/S0305-750X(96)00133-7 |
| Abstract: | This paper presents 1992-1993 survey evidence from Ghana, Malawi, Nigeria and Tanzania on how informal financial agents serve market niches that banks cannot readily reach. It shows that liberalization of repressive financial policies had little effect in deepening formal financial markets at the expense of informal ones in the countries studied. In contrast, informal financial agents have responded positively to demand from clients who continued to lack access to formal finance. Removal of financially repressive policies is a necessary but not sufficient condition for extension of the formal financial frontier and reduction of fragmentation. In the prevailing situation of imperfect information and uncertainty, informal financial agents demonstrate a comparative advantage in serving the large share of African populations with little access to formal intermediaries. In the medium term, expanding the role of informal institutions appears to be an efficient way to reduce financial dualism and increase access of the broader population to financial services. Bibliogr., notes, ref., sum. |
