Colonial coinage and financial development (original) (raw)

Until the 21st century, Africa remains the only region in the world where there are countries whose currency is derived from the colonial system. Very far from political and geostrategic considerations, the question has always been asked in order to know the effect of this lack of monetary sovereignty on the evolution of economic activity. Therefore, this study investigates the relationship between Colonial coinage and financial development by applying Generalised Method of Moments. The importance of this approach, is to correct heterogeneity and endogeneity problems. The sample consist of 48 African countries data over 10 years. This study findings are like-minded with those of economic literature around the law, finance and endowment theory. They suggest that in sub-Saharan Africa, the quality of nstitutions has a very large influence on access to domestic credit. Moreover, the main enclave for the development of the financial system due to colonial coinage is the sluggish stability of the latter colonial coinage in Africa.

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