Impact of international financial integration on investment and Africa’s economic performance : some empirical evidence

This paper examines the issues of international and regional financial integration and its impact taking a sample 25 SSA countries. The research tests both the direct and indirect channels through which the impact of financial integration works and is transmitted to the real economy. Directly, it is argued that financial openness affects economic growth through enabling access to foreign financial markets, increasing financial service efficiency and helping in diversification of risks and consumption smoothing. Thus while inducing additional capital investment, it also fosters macroeconomic discipline. Indirectly, the process of international financial integration facilitates the transfer of technological know-how, promotes trade and enhances specialization.