Does the Development of Financial Services Improve Export Diversification? The Case of the Cemac Zone

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.