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This article compares African countries to South Korea in terms of knowledge economy (KE). Emphasis is laid on human capital, knowledge creation, knowledge diffusion, institutions and economic incentives. The analytical approach consists of providing knowledge economy catch-up strategies that can be understood within the context of country-specific gaps between the frontier country in KE and laggard African countries. The empirical evidence is based on sigma convergence with data for the period 1996-2010. Overall, a KE diagnosis is provided by assessing KE gaps (between South Korea and specific-African countries) and suggesting compelling catch-up strategies with which to reduce identified gaps. Contemporary and non-contemporary policies from South Korea and more contemporary policies based on challenges of globalisation are discussed. The policy relevance of this inquiry aligns with the scholarly perspective that catch-up between South Korea and more advanced economies was accelerated by the former adapting to and assimilating relatively obsolete technological know-how from more developed nations.

Purpose - This study examines how linkages between information and communication technology (ICT) and remittances affect the doing of business. Design/methodology/approach - The focus is on a panel of 49 sub-Saharan African countries for the period 2000-2012. The empirical evidence is based on Generalised Method of Moments. Findings - While we establish some appealing results in terms of net negative effects on constraints to the doing of business (i.e. time to start a business and time to pay taxes), some positive net effects are also apparent (i.e. number of start-up procedures, time to build a warehouse and time to register a property). We also establish ICT penetration thresholds at which the unconditional effect of remittances can be changed from positive to negative, notably: (i) for the number of start-up procedures, an internet level of 9.00 penetration per 100 people is required while (ii) for the time to build a warehouse, a mobile phone penetration level of 32.33 penetration per 100 people is essential. Practical and theoretical implications are discussed. Originality/value - To the best of our knowledge, this is the first study to assess linkages between ICT, remittances and doing business in Sub-Saharan Africa.

The paper investigates the effects of information asymmetry (between the realised return and the expected return) on market timing in the mutual fund industry. For the purpose, we use a panel of 1488 active open-end mutual funds for the period 2004-2013. We use fund-specific time-dynamic betas. Information asymmetry is measured as the standard deviation of idiosyncratic risk. The dataset is decomposed into five market fundamentals in order to emphasis the policy implications of our findings with respect to (i) equity, (ii) fixed income, (iii) allocation, (iv) alternative and (v) tax preferred mutual funds. The empirical evidence is based on endogeneity-robust Difference and System Generalised Method of Moments. The following findings are established. First, information asymmetry broadly follows the same trend as volatility, with a higher sensitivity to market risk exposure. Second, fund managers tend to raise (cutback) their risk exposure in time of high (low) market liquidity. Third, there is evidence of convergence in equity funds. We may therefore infer that equity funds with lower market risk exposure are catching-up with their counterparts with higher exposure to fluctuation in market conditions. The paper complements the scarce literature on market timing in the mutual fund industry with time-dynamic betas, information asymmetry and an endogeneity-robust empirical approach.

This study investigates the role of information and communication technology (ICT) on income inequality through financial development dynamics of depth (money supply and liquid liabilities), efficiency (at banking and financial system levels), activity (from banking and financial system perspectives) and size, in 48 African countries for the period 1996 to 2014. The empirical evidence is based on Generalised Method of Moments. While both financial depth and size are established to reduce inequality contingent on ICT, only the effect of financial depth in reducing inequality is robust to the inclusion of time invariant variables to the set of strictly exogenous variables. We extend the analysis by decomposing financial depth into its components, namely : formal, informal, semi-formal and non-formal financial sectors. The findings based on this extension show that ICT reduces income inequality through formal financial sector development and financial sector formalization as opposed to informal financial sector development and financial sector informalization. The study contributes at the same time to the macroeconomic literature on measuring financial development and responds to the growing field of addressing post-2015 Sustainable Development Goals (SDGs) inequality challenges by means of ICT and financial access.

This study investigates the role of financial access in modulating the effect of education and lifelong learning on inequality in 48 African countries for the period 1996 to 2014. Lifelong learning is conceived and measured as the combined knowledge gained from primary through tertiary education while the three educational indicators are: primary school enrolment; secondary school enrolment and tertiary school enrolment. Financial development dynamics are measured with financial system deposits (liquid liabilities), financial system activity (credit) and financial system efficiency (deposits/credit). Three measures of inequality are employed notably: the Gini coefficient; the Atkinson index and the Palma ratio. The estimation strategy is based on Generalised Method of Moments. The following findings are established. First, primary school enrolment interacts with all financial channels to exert negative effects on the Gini index. Second, lifelong learning has negative net effects on the Gini index through financial deposit and efficiency channels. Third, for the most part, the other educational levels do not significantly influence inequality through financial access channels. Policy implications are discussed.

This review summarises a survey of about 70 empirical studies on proposed African monetary unions published during the past fifteen years. Four main strands are outlined in four tables. They include the: (i) West African Monetary Zone (WAMZ), (ii) East African Monetary Union (EAMU), (iii) Southern African Monetary Union (SAMU) and (iv) African Monetary Union (AMU). A number of concerns are apparent from the feasibility and/or desirability of potential monetary unions. They are variations in: empirical strategies, selection of variables, considered periodicities and sampled countries. The Hegelian dialectics are used to establish selective expansion as the predominant mode of monetary integration. Some studies make the case for strong institutions and pegs as alternatives to currency unions. The employment of cluster analysis, distinguishing shocks from responses in the examination of business cycle synchronisation and the disaggregation of panels into sub-samples provide more subtle policy implications.

This study complements the scarce literature on conditional market timing in the mutual fund industry by assessing determinants of market timing throughout the distribution of market exposure. It builds on the intuition that the degree of responsiveness by fund managers to investigated factors (aggregate liquidity, information asymmetry, volatility and market excess return) is contingent on their levels of market exposure. To this end, we use a panel of 1467 active open-end mutual funds for the period 2004-2013. Fund-specific time-dynamic beta is employed and we avail room for more policy implications by disaggregating the dataset into market fundamentals of: equity, fixed income, allocation and tax preferred. The empirical evidence is based on Quantile regressions. The following findings are established. First, there is consistent positive threshold evidence of volatility and market return in market timing, with the slim exception of allocation funds for which the pattern of volatility is either U- or S-shaped. Second, the effect of volatility and market return are consistently positive and negative respectively in the bottom and top quintiles of market exposure, but for allocation funds. Third, the effects of information asymmetry and aggregate liquidity are positive and negative, contingent on specifications, level of market exposure and market fundamentals. The findings broadly suggest that blanket responses of market exposures to investigated factors are unlikely to represent feasible strategies for fund managers unless they are contingent on initial levels of market exposure and tailored differently across ‘highly exposed’-fund managers and ‘lowly exposed’-fund managers. Implications for investors and fund managers are discussed.

This study assesses the feasibility of policy harmonization in the fight against terrorism in 53 African countries with data for the period 1980-2012. Four terrorism variables are used, namely: domestic, transnational, unclear and total terrorism dynamics. The empirical evidence is based on absolute beta catch-up and sigma convergence estimation techniques. There is substantial absence of catch-up. The lowest rate of convergence in terrorism is in landlocked countries for regressions pertaining to unclear terrorism (3.43% per annum for 174.9 years) while the highest rate of convergence is in upper-middle-income countries in domestic terrorism regressions (15.33% per annum for 39.13 years). After comparing results from the two estimation techniques, it is apparent that in the contemporary era, countries with low levels of terrorism are not catching-up their counterparts with high levels of terrorism. As a policy implication, whereas some common policies may be feasibly adopted for the fight against terrorism, the findings based on the last periodic phase (2004-2012) are indicative that country-specific policies would better pay-off in the fight against terrorism than blanket common policies. Some suggestions of measures in fighting transnational terrorism have been discussed in the light of an anticipated surge in cross-national terrorism incidences in the coming years.

Using cross-country differences in the degree of isolation before the advent of technologies in sea and air transportation, we assess the relationship between geographic isolation and financial development across the globe. We find that pre-historic geographical isolation has been beneficial to development because it has contributed to contemporary cross-country differences in financial intermediary development. The relationship is robust to alternative samples, different estimation techniques, outliers and varying conditioning information sets. The established positive relationship between geographic isolation and financial intermediary development does not significantly extend to stock market development.

Information technology is increasingly facilitating mechanisms by which information asymmetry between lenders and borrowers in the financial sector can be reduced in order to enhance financial access for human and economic development in developing countries. We examine conditional financial development from ICT-driven information sharing in 53 African countries for the period 2004-2011, using contemporary and non-contemporary quantile regressions. ICT is measured with mobile phone penetration and internet penetration whereas information sharing offices are public credit registries and private credit bureaus. The following findings are established. First, there are positive effects with positive thresholds from ICT-driven information sharing on financial depth (money supply and liquid liabilities) and financial activity (at banking and financial system levels). Second, for financial intermediation efficiency, the positive effects from mobile-driven information sharing are apparent exclusively in certain levels of financial efficiency. Third, with regard to financial size, mobile-driven information sharing is positive with a negative threshold, whereas, internet-driven information sharing is positive exclusively among countries in the bottom half of financial size. Positive thresholds are defined as decreasing negative or increasing positive estimated effects from information sharing offices and vice-versa for negative thresholds. Policy implications are discussed.

This study assesses the knowledge economy (KE) performance of lagging African countries vis-à-vis their frontier counterparts with regard to the four dimensions of the World Bank’s knowledge economy index (KEI). The empirical exercise is for the period 1996-2010. It consists of first establishing leading nations before suggesting policy initiatives that can be implemented by sampled countries depending on identified gaps that are provided with the sigma convergence estimation approach. The following are established frontier knowledge economy countries. (i) For the most part, North African countries are dominant in education. Tunisia is overwhelmingly dominant in 11 of the 15 years, followed by Libya which is a frontier country in two years while Cape Verde and Egypt lead in a single year each. (ii) With the exception of Morocco that is leading in the year 2009, Seychelles is overwhelmingly dominant in ICT. (iii) South Africa also indomitably leads in terms of innovation. (iv) While Botswana and Mauritius share dominance in institutional regime, economic incentives in terms of private domestic credit are most apparent in Angola (8 years), the Democratic Republic of Congo (3 years) and Tanzania, Sierra Leone and Malawi (each leading in one year).

This study assesses the effect of globalisation on governance in 51 African countries for the period 1996-2011. Ten bundled and unbundled governance indicators and four globalisation variables are used. The empirical evidence is based on Generalised Method of Moments. The following findings are established. First, on political governance, only social globalisation improves political stability while only economic globalisation does not increase voice & accountability and political governance. Second, with regard to economic governance: (i) only economic globalisation significantly promote regulation quality; (ii) social globalisation and general globalisation significantly advance government effectiveness and (iii) economic globalisation and general globalisation significantly promote economic governance. Third, as concerns institutional governance, whereas only social globalisation improves corruption-control, the effects of globalisation dynamics on the rule of law and institutional governance are not significant. Fourth, the impacts of social globalisation and general globalisation are positive on general governance. It follows that: (i) political governance is driven by voice and accountability compared to political stability; (ii) economic governance is promoted by both regulation quality and government effectiveness from specific globalisation angles and (iii) globalisation does not improve institutional governance for the most part. Theoretical contributions and policy implications are discussed.

This study investigates the role of information sharing offices (public credit registries and private credit bureaus) in reducing market power for financial access in the African banking industry. The empirical evidence is based on a panel of 162 banks from 42 countries for the period 2001-2011. Three simultaneity-robust empirical strategies are employed, namely: (i) Two Stage Least Squares with Fixed Effects in order to account for simultaneity and the observed heterogeneity; (ii) Generalised Method of Moments (GMM) to control for simultaneity and time-invariant omitted variables and (iii) Instrumental Variable Quantile regressions to account for simultaneity and initial levels of financial access. In order to ensure that information sharing offices influence market power for loan price (quantity) to decrease (increase), public credit registries should have between 3.156% and 3.3% coverage, while private credit bureaus should have between 1.443 and 18.4% coverage. The established thresholds are cut-off points at which information sharing offices completely neutralise the negative effect of market power on financial access. The thresholds are contingent on the dimension (loan price versus loan quantity) and distribution (conditional mean versus conditional distribution) of financial access.

Financial dollarization in Sub-Saharan Africa is the most persistent compared to other regions of the world. This study complements the existing scant literature on dollarization in Africa by assessing the role of information sharing offices (public credit registries and private credit bureaus) on financial dollarization in 26 countries of SSA for the period 2001-2012. The empirical evidence is based on Ordinary Least Squares (OLS) and Generalised Method of Moments (GMM). The findings show that information sharing offices (which are designed to reduce information asymmetry) in the banking industry are a deterrent to dollarization. Policy implications are discussed.

This paper assesses the role knowledge economy (KE) in African business in 53 countries for the period 1996-2010. The four KE components of the World Bank are employed, notably: education, innovation, economic incentives & institutional regime and information & communication technology. The business indicators are classified into: starting, doing and ending business. Principal components analysis and panel instrumental variable fixed effects approaches are employed as empirical strategies. The findings which are broadly consistent with intuition and the predictions of economic theory suggest that KE policies will substantially boost the starting and doing of business in Africa. This is relevant in fighting unemployment and improving African competitiveness in global value chains. Policy implications for the relevance of each specific KE dimension in African business are discussed with particular emphasis on the theoretical underpinnings of the study. The investigation is original in its contribution at the same time to the scarce literature on African KE and the growing challenges of improving the business climate of the continent by means of KE.

We examine policy thresholds of information sharing for financial development in 53 African countries for the period 2004-2011. Public credit registries (PCR) and private credit bureaus (PCB) are used as proxies for reducing information asymmetry whereas financial development includes all financial dimensions identified by the Financial Development and Structure Database (FDSD) of the World Bank, namely: depth, efficiency, activity and size. The empirical evidence is based on interactive Generalised Methods of Moments with forward orthogonal deviations. The following findings are established. First, PCR and PCB have negative effects on financial depth, with the magnitude of the former higher. Second, contrary to PCR which have insignificant effects, PCB has a negative impact on banking system efficiency. Third, PCR and PCB have negative impacts on financial activity, with the magnitude of the latter higher. Moreover, their marginal effects are negative. Fourth, PCR and PCB have positive effects on financial size, with the effect of the former higher. While marginal effects are positive, corresponding thresholds are not within range. Policy implications are discussed.

To the best our knowledge, in the first empirical macroeconomic examination of the nexus between financial intermediation and mobile phones, Asongu employs two conflicting financial system definitions in the assessment of how mobile phones have stimulated financial development in Africa. Within the framework of the dominant International Monetary Fund’s International Financial Statistics (2008) definition, mobile phones are established to be negatively associated with financial intermediary dynamics of depth, activity and size. Conversely, when the previously neglected informal financial sector is integrated into the conception, definition and measurement of the financial system, mobile phones are positively (negatively) correlated with the informal (formal) financial intermediation sector. The empirical evidence is based on 52 African countries. Causality in the established linkages has been confirmed in subsequent studies by the same author. At least three policy implications derive from the findings. First, the role of informal financial intermediation is increasing to the detriment of formal financial mechanisms. Second, in order to capture the positive effect of mobile phones on finance, it is imperative to integrate the missing informal financial sector component into the IMF definition of the financial system. Third, it is a wake-up call for more scholarly research on: (i) macroeconomic financial development implications of mobile phone penetration and (ii) monetary policy instruments in the face of burgeoning ‘mobile phone’-oriented financial intermediation.

This study investigates the effect of foreign aid on education and lifelong learning in 53 African countries for the period 1996-2010. Three main issues are assessed, notably: (i) the effect of aid on education; (ii) the incremental impact of aid on education and (iii) the effect of aid on lifelong learning. Lifelong learning is measured as the combined knowledge acquired during the primary, secondary and tertiary levels of education. Foreign aid dynamics include: Total aid, aid from Multilateral Donors (MD) and aid from the Development Assistance Committee (DAC) countries. The empirical evidence is based on an endogeneity-robust Generalized Method of Moments. The following findings are established. First, the aid variables have positive effects on primary school enrolment and lifelong learning, with the exception of aid from MD which positively affects only lifelong learning. Second, the positive effect on primary school enrolment consistently has a higher magnitude compared to the corresponding impact on lifelong learning. Third, the effects of aid dynamics on secondary and tertiary school enrolments are not significant. We also contribute to the literature by proposing an indicator of lifelong learning for developing countries.

To the best our knowledge, in the first empirical macroeconomic examination of the nexus between financial intermediation and mobile phones, Asongu employs two conflicting financial system definitions in the assessment of how mobile phones have stimulated financial development in Africa. Within the framework of the dominant International Monetary Fund's International Financial Statistics (2008) definition, mobile phones are established to be negatively associated with financial intermediary dynamics of depth, activity and size. Conversely, when the previously neglected informal financial sector is integrated into the conception, definition and measurement of the financial system, mobile phones are positively (negatively) correlated with the informal (formal) financial intermediation sector. The empirical evidence is based on 52 African countries. Causality in the established linkages has been confirmed in subsequent studies by the same author. At least three policy implications derive from the findings. First, the role of informal financial intermediation is increasing to the detriment of formal financial mechanisms. Second, in order to capture the positive effect of mobile phones on finance, it is imperative to integrate the missing informal financial sector component into the IMF definition of the financial system. Third, it is a wake-up call for more scholarly research on: (i) macroeconomic financial development implications of mobile phone penetration and (ii) monetary policy instruments in the face of burgeoning 'mobile phone'-oriented financial intermediation.

This study provides a survey of recent advances in the literature on proposed African monetary unions. The survey comprises about 60 empirical papers published during the past fifteen years. Four main strands are discussed individually and collectively, notably, the proposed: West African Monetary Zone (WAMZ), East African Monetary Union (EAMU), Southern African Monetary Union (SAMU) and African Monetary Union (AMU). We observe a number of issues with establishing the feasibility and/or desirability of potential monetary unions, inter alia, variations in: choice of variables, empirical strategies, sampled countries and considered periodicities. We address this ambiguity by reviewing studies with scenarios that are consistent with Hegelian dialectics and establish selective expansion as the predominant mode of monetary integration. Some proponents make cases for strong pegs and institutions as viable alternatives to currency unions. Using cluster analysis, disaggregating panels into sub-samples and distinguishing shocks from responses in the examination of business cycle synchronisation provide more subtle policy implications. We caution that for inquiries using the same theoretical underpinnings, variables and methods just by modifying the scope/context and periodicity may only contribute to increasing the number of conflicting findings. Authors should place more emphasis on new perspectives and approaches based on caveats of, and lessons from the European Monetary Union (EMU) and CFA zones.