Historical Institutional Determinants of Financial System Development in Africa

Chukwunonye O. Emenalo, Francesca Gagliardi, Geoffrey Hodgson

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9 Citations (Scopus)
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The literature on the determinants of cross-country variation in financial system development identifies historical institutional factors, mostly rooted in colonial effects, as key causes. Using a sample of 39 African former European colonies for 2006-11, this paper investigates the extent to which the historical institutional determinants identified by legal origins, disease endowment, religion-based and ethnic fractionalisation theories explain current differences in financial system development across Africa. While most existing research focuses only on one financial system development dimension, namely financial system depth, this article considers also financial system access. The results do not support any of the above theories when depth measures are used, while three of them (legal origins, disease endowment and ethnic fractionalisation theories) are validated when using access measures. This suggests that in Africa financial system depth and access do not have common historical institutional determinants, pointing to the need for greater fine tuning of prevalent theories and empirical measures.
Original languageEnglish
Pages (from-to)345-372
Number of pages28
JournalJournal of Institutional Economics
Issue number2
Early online date20 Feb 2017
Publication statusPublished - 1 Apr 2018


  • financial system development
  • legal origins theory
  • religion-based theory
  • ethnic fractionalization theory
  • disease endowment theory
  • Africa


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