ABSTRACT
This chapter discusses a number of issues that need to be addressed in order to make the financial systems respond to stimuli for growth and diversification. It also discusses the scope of the problems facing sub-Saharan Africa (SSA) financial markets. The chapter highlights new insights into dealing with the problems in the light of the East Asian experiences. It describes savings mobilization and financial intermediation. The chapter analyses how the different risks facing lenders and borrowers condition institutional development. The chapter shows how financial agents have developed mechanisms for limiting the risks they are exposed to, leading to market segmentation and information-constrained equilibrium. It explores the impact of financial liberalization on financial market performance and institution building, and the environment for regulating and supervising financial market operations. Clearly, in most SSA countries, the expected positive effects from liberalization in savings mobilization and credit allocation have been slow to emerge.
