Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/123635
Authors: 
Asongu, Simplice A.
Year of Publication: 
2014
Series/Report no.: 
AGDI Working Paper WP/14/021
Abstract: 
In this paper, we dissect with great acuteness contemporary insufficiencies of the IFS (2008) definition of the financial system and conclude from sound theoretical underpinnings and empirical justifications that the foundation, on which it is based, while solid for developed countries, holds less ground in developing countries. Perhaps one of the deepest empirical hollows in the financial development literature has been the equation of financial depth in the perspective of money supply to liquid liabilities. This equation has put on the margin (and skewed) burgeoning phenomena of mobile banking, knowledge economy (KE), inequality etc. We conclude that the informal financial sector, a previously missing component in the IFS conception and definition of the financial system can only be marginalized at the cost of misunderstanding recent burgeoning trends in mobile phone penetration, KE and poverty. Hence, the IFS definition has incontrovertibly fought its final dead battle and lost in the face of soaring trends highlighted above. Despite the plethora of econometric and policy-making sins the definition has committed in developing countries through bias estimates and misleading inferences, may its soul RIP.
Subjects: 
Banking
Mobile Phones
Shadow Economy
Financial Development
Poverty
JEL: 
E00
G20
I30
O17
O33
Document Type: 
Working Paper

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