The Global South after the Crisis

The Global South after the Crisis

Growth, Inequality and Development in the Aftermath of the Great Recession

Edited by Hasan Cömert and Rex A. McKenzie

This volume is split into two accessible sections. The first part concentrates on the impact of the crisis on growth, inequality, policy responses and policy shifts in key areas such as central banking. The second part comprises individual country case studies and includes an exploration of the vulnerabilities related to the integration of developing economies into the world economy. The effect of the crisis on trade, and the ways in which some developing countries have entered into a prolonged period of stagnant growth following the global crisis are all considered.

Chapter 4: Monetary transmission in Africa: a review of official sources

Rex A. McKenzie

Subjects: economics and finance, development economics, post-keynesian economics


This chapter focuses on the subject of monetary transmission in Africa. It begins with a report on the effects of the financial crisis of 2008 in Africa. In the countries with more developed financial systems the financial channel proved to be the most important in transmitting the crisis. In the more peripheral countries the trade channel proved to be the most important. Where countries were able to withstand the global shock coming from the financial crisis they did so with a diversified group of trading partners in fast growing economies. The chapter then turns to examine three post crisis institutional developments and asks, how are: (a) an increased momentum towards regional integration, (b) the rise of Pan African banking and, (c) an increase in cross border flows, affecting the monetary transmission mechanism (MTM) in Africa. It is clear from the literature that the rise of Pan African banking and the regionalization thrust of the authorities are deepening the financial channels between countries. But with respect to cross border flows, the huge size of deposits maintained by Africa’s BIS reporting banks suggest relatively low levels of bank intermediation and competition. Thus the benefits that are assumed to accrue as a result of increased cross border flows are withdrawn from the local economy and stored up in the BIS banks. We know large deposits reflect the expectations of the deposit holders. But beyond that very little is known about the role of expectations and the workings of the expectations channel in monetary transmission in Africa. Even less is known about how such expectations would interact with those formed as a result of operations in the large informal sectors which characterise African macro economies. Until research can bridge this gap, the increasing cross border flows with the large deposits held in BIS banks form the basis yet another explanation for the historical weakness of the MTM in Africa.

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