Exchange rate liberalization and market efficiency in the Gambia

This paper examines the experience of The Gambia following the liberalization of its exchange rate and financial markets in the mid-1980's. It is shown that although nominal interest rates are high, and the real interest rate positive, there is no evidence of systematic excess returns to holders of Gambian treasury bills. The outcome suggests that floating the exchange rate can avert the "peso problem" and work efficiently even in an extremely thin foreign exchange market.

A hard copy is available in UCD Library at GEN 330.08 IR/UNI