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Measuring Financial Barriers Among East African Community Countries
Author:
Yi David Wang null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2010: Issue 194
Language:
English
Publication Date:
01 Aug 2010
DOI:
https://doi.org/10.5089/9781455205240.001
ISBN:
9781455205240
ISSN:
1018-5941
Pages:
26
Keywords:
WP; EAC country; foreign exchange market; exchange rate; dollar; Forward rates; foreign exchange; financial barrier; financial integration; EAC member; EAC currency; spot market; Kenya shilling; Currency markets; Interest rate parity; Currencies; Interbank rates; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper seeks to quantify existing financial barriers among East African Community (EAC) member countries based on analysis of each member country’s foreign exchange market. The primary contribution of this paper is the generation of an aggregate measure of financial barriers for the three relatively more advanced members (Kenya, Uganda, and Tanzania) using forward foreign exchange and interbank interest rate data. Its empirical results, which are corroborated by other evidence such as the levels of development of the financial markets and restrictions on capital flows, suggest that Kenya is the EAC’s most financially open country, followed by Uganda, and then Tanzania. The fact that the three countries exhibit different degrees of financial openness suggests that financial integration in the EAC region has a way to go.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund