FINANCIAL DEVELOPMENT, INSTITUTIONS AND ECONOMIC GROWTH IN SUB-SAHARAN AFRICA
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Date
2021-05-10
Authors
ASAFO, JOSEPH KWASI
Journal Title
Journal ISSN
Volume Title
Publisher
University of Cape Coast
Abstract
This study analyses the effect of financial development on economic growth in SSA
and the moderating role played by institutions. The study employed system General
Methods of Moments (GMM) approach on 36 SSA countries over 18-year period.
The study revealed that using narrow-based financial development indicators as a
proxy for financial development may lead to underestimation of the effect of
financial development on economic growth. Financial market development is the
aspect of financial development that is found to be efficient and effective in
affecting economic growth. Again, all the institutional variables are effective in
playing the moderating role of institutions on financial development to affect
growth but political stability appeared to be the driving force among the
institutional variables in SSA. Based on the results, the study recommends that
researchers must consider the multidimensional measures for financial
development when analysing the effect of financial development on any
macroeconomic or policy variable. Also, resources and policies must be directed
towards financial market development by various governments and their central
banks anytime they desired to stimulate the financial development to affect growth.
In addition, the study recommends that, attention should be given to all the
institutional variables but political institutions need to be given more priority within
the SSA region by various governments.