
Contents
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29.1 Introduction: The French Franc and the Creation of the CFA Franc in 1945 29.1 Introduction: The French Franc and the Creation of the CFA Franc in 1945
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29.2 The CFA Franc Union and Operating Principles 29.2 The CFA Franc Union and Operating Principles
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29.3 What are Advantages to the African Countries? 29.3 What are Advantages to the African Countries?
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29.3.1 Price Stability with Fixed Exchange Rate 29.3.1 Price Stability with Fixed Exchange Rate
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29.3.2 Benefits to France and EU Control 29.3.2 Benefits to France and EU Control
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29.3.3 Trade and Economic Integration 29.3.3 Trade and Economic Integration
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29.4 The Financial System and Economic Growth 29.4 The Financial System and Economic Growth
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29.5 The Financial Sector in CEMAC 29.5 The Financial Sector in CEMAC
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29.6 Model: GDP and the Financial Sector 29.6 Model: GDP and the Financial Sector
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29.6.1 Estimations and Results 29.6.1 Estimations and Results
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29.7 Conclusion 29.7 Conclusion
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References References
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29 The CFA Franc: The Financial Sector and Economic Growth in CEMAC
Get accessAloysius Ajab Amin, Clayton State University
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Published:26 January 2023
Cite
Abstract
The chapter briefly traces the evolution of the Franc CFA Zone- a monetary union, which is one of the world’s longest surviving currency arrangement. It examines the implication of the four main principles of the monetary arrangements with the advantages and costs. It looks at the membership in CEMAC especially on how the agreement has impacted the financial sector and consequently CEMAC’s economy. The CEMAC’s economy is oil dominated and oil price shocks influence the region’s economic performance. The impact is seen in region’s limited intraregional trade, weak financial development and low private sector financing. The chapter, therefore, assesses the financial sector of the zone, and analyses the role of financial sector on the growth of the private sector and economic expansion. The results of the estimated model show the importance of the financial sector to the private sector. The chapter concludes that the weak financial sector/system of the CFA franc zone has hindered the economic expansion because of the limited private sector financing. Hence, economic diversification and financial development is essential in the regional economic expansion.
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