African Journals Online
African Finance Journal

Volume 4, Part 2, 2002
Abstracts

IDENTIFYING PROBLEM BANKS IN SUB-SAHARA AFRICA

Moses Tefula,
Institute for Development Policy and Management
University of Manchester

and

Victor Murinde
Birmingham Business School, The University of Birmingham; and Institute for Development
Policy and Management (IDPM)
University of Manchester

ABSTRACT

This paper uses a large panel dataset of 62 commercial banks from 11 African countries for the period 1991 - 1998 to empirically isolate the determinants of bank risk in African economies. It is found that liquidity and asset quality variables are the most important indicators of bank risk. The evidence on liquidity is consistent with the theory that contagion risk is the main inertia behind bank runs, in the context that severe liquidity constraints seriously undermine public confidence and are signals of terminal risk. The evidence on asset quality suggests that deterioration in asset

quality is a precursor of terminal risk. The main policy implication of these findings is that liquidity and asset quality variables are potential “early warning” indicators of bank failure in African economies.

FINANCIAL LIBERALIZATION AND STOCK MARKET EFFICIENCY: EMPIRICAL EVIDENCE FROM AN EMERGING MARKET

Aktham Maghyereh
College of Economics & Administrative Sciences
The Hashemite University, Zarqa, Jordan

and

Ghassan Omet
College of Economics & Administrative Sciences
The Hashemite University, Zarqa, Jordan.

ABSTRACT

This paper examines whether the Amman Stock Exchange has become more weak form efficient since liberalization in 1997. Using a battery of econometrics tests ondaily closing price index data of the market for the pre-liberalization period (January 1993-May 1997) and the post liberalization period (June 1997-December 2000), the paper finds that in spite of the theory suggesting otherwise, market liberalization has not turned around the Amman Stock Exchange to become weak-form efficient.

FROM REPRESSION TO LIBERALIZATION: THE CHANGING ROLE OF GOVERNMENT

Charles Awasu
Department of Sociology
Nyack College

ABSTRACT

Two competing theories in financial economics offer different policy approaches for financial market development. The imperfect information paradigm supports financial repression with government intervention. Financial liberalization policies are designed to “liberate” the financial systems from government interference. Despite decades of intervention and liberalization, savings and investments in many developing countries have remained low. This suggests that policy designs influenced by the two paradigms are not sufficient to address problems facing financial systems in developing countries. Financial deepening cannot occur without sound institutional infrastructure. While getting prices is necessary, public policy has an important role in financial market development.