Does the Development of Financial Services Improve Export Diversification? The Case of the Cemac Zone
Dimala Olivier
Faculty of Economics and Applied Management, University of Douala, Cameroon.
Mekanda Eto'o Jean Steve
Faculty of Economics and Applied Management, University of Douala, Cameroon.
Wepaguiewe Armel Romaric
Faculty of Economics and Management, University of Yaoundé II, Cameroon.
Medjo Nna Sinclair
Faculty of Economics and Applied Management, University of Douala, Cameroon.
Tsomb Tsomb Etienne Inedit Blaise *
Faculty of Economics and Applied Management, University of Douala, Cameroon.
*Author to whom correspondence should be addressed.
Abstract
Aims: The main objective of this paper is to analyze the effect of financial services development on export diversification in the countries of the Economic Community of Central African States.
Methodology: We applied the two stage least squares estimation method on a panel model to capture the effects of financial services on Theil's export concentration index. The sample comprises five countries observed over the period from 2007 to 2022.
Results: The results show that, the development of financial services and the increase in intra-regional trade in this community promote export diversification. In addition, increased investment and access to electricity are key to export diversification in this region.
Recommendation and conclusion: Hence the need for these countries to implement policies conducive to trade liberalization and investment promotion in the CEMAC zone. Economic liberalization and investment development are essential to export diversification.
Keywords: Financial development, export diversification, central african economic and monetary community, two stage least squares