Empirical Research on Financial Efficiency and Economic Growth in Sub-Saharan Africa

Gibogwe, V., Nigo, A. and Kufuor, K. 2022. Empirical Research on Financial Efficiency and Economic Growth in Sub-Saharan Africa. Journal of Research, Innovation and Technologies. 1 (1), pp. 23-32. https://doi.org/10.57017/jorit.v1.1(1).02

TitleEmpirical Research on Financial Efficiency and Economic Growth in Sub-Saharan Africa
TypeJournal article
AuthorsGibogwe, V., Nigo, A. and Kufuor, K.
Abstract

This study contributes to the literature on financial efficiency and growth. We show evidence from the effects of controlling institutional variables given the increase in domestic credit. The domestic credit is adverse, with an insignificant effect on per capita income growth. We make two observations from our findings. First, the negative but insignificant coefficients of the measure of bank credit across all model specifications seem to go against the supply-leading hypothesis, as financial development hurts economic growth; nevertheless, given that the impact is insignificant, this draws more into a neutrality
hypothesis of no effect. Second, the findings are likely indications of the underdeveloped state of sub-Saharan Africa's financial system, implying that the present state of the financial systems is not robust enough to be a contributory drive towards enhancing economic growth in the region. However, all models have positive control variables (Inflation and gross fixed capital formation). All coefficients of interactions between credit and institutional quality are statistically insignificant (negative in four of six models).

Keywordsforeign direct investment
economic growth
absorptive capacity
human capital
market liberalization
JournalJournal of Research, Innovation and Technologies
Journal citation1 (1), pp. 23-32
ISSN2971-8317
Year2022
PublisherRITHA Publishing
Publisher's version
License
CC BY 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.57017/jorit.v1.1(1).02
Publication dates
Published30 Sep 2022

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