IDEAS home Printed from https://ideas.repec.org/a/ags/afjecr/320584.html
   My bibliography  Save this article

Dynamic Relationship Between Financial Sector Development and Inclusive Growth in Sub-Sahara African Countries

Author

Listed:
  • Olayiwola, Abiodun S.

Abstract

This study examines the direction of causality between financial sector development and inclusive growth using panel data of 32 countries in sub-Saharan Africa (SSA) between 2000 and 2019. Findings from Dumitrescu - Hurlin panel causality test revealed that the panel of SSA’s countries and two other sub-regions (West and South African sub-regions) indicate unidirectional causality while the other two (East and Central African) show evidence of no causality. Likewise, this study observes some variations at the country-specific level where 24 out of the 32 countries selected displayed evidence of no causality, and 8 countries demonstrated evidence of unidirectional causality. Thus, the study concludes that both inclusive growth and financial sector development are too weak to cause each other in most SSA’s countries since bi-directional causality is nonexistent and recommends that policymakers in respective SSA sub-regions and countries should implement massive inclusive growth strategies and promotes relevant financial innovations, reforms, and efficiency in financial inclusion across the region.

Suggested Citation

  • Olayiwola, Abiodun S., 2022. "Dynamic Relationship Between Financial Sector Development and Inclusive Growth in Sub-Sahara African Countries," African Journal of Economic Review, African Journal of Economic Review, vol. 10(2), March.
    • Handle: RePEc:ags:afjecr:320584
    DOI: 10.22004/ag.econ.320584
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/320584/files/Olayiwola%202022%20Dynamic%20relationship.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.320584?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Muzafar Habibullah & Yoke-Kee Eng, 2006. "Does Financial Development Cause Economic Growth? A Panel Data Dynamic Analysis for the Asian Developing Countries," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 11(4), pages 377-393.
    2. International Monetary Fund, 2007. "Namibia: Financial System Stability Assessment, including Report on the Observance of Standards and Codes on Banking Supervision," IMF Staff Country Reports 2007/083, International Monetary Fund.
    3. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.
    4. Dramane, Abdoulaye, 2022. "The Nexus between Military Spending, Tax Revenues and Economic Growth in the G5 Sahel Countries," African Journal of Economic Review, African Journal of Economic Review, vol. 10(2), March.
    5. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014.
    6. Sheilla Nyasha & Nicholas M. Odhiambo, 2018. "Financial Development and Economic Growth Nexus: A Revisionist Approach," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 47(1), pages 223-229, February.
    7. Durusu-Ciftci, Dilek & Ispir, M. Serdar & Yetkiner, Hakan, 2017. "Financial development and economic growth: Some theory and more evidence," Journal of Policy Modeling, Elsevier, vol. 39(2), pages 290-306.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ndivhuho Eunice Ratombo & Itumeleng Pleasure Mongale, 2024. "Establishing the Effects of Internet Users on Inclusive Growth for the SADC Members States: Panel ARDL Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 316-329, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ismail Senturk & Fiaz Ahmad Sulehri & Syeda Mehak Ali, 2022. "Financial Development and Innovation Led-Growth: A Case of Selected Developing Countries," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 8(3), pages 81-97, September.
    2. Clement Olalekan Olaniyi & Sunday Idowu Oladeji, 2021. "Moderating the effect of institutional quality on the finance–growth nexus: insights from West African countries," Economic Change and Restructuring, Springer, vol. 54(1), pages 43-74, February.
    3. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 111, pages 84-96.
    4. Mohammad Mafizur Rahman & Xuan-Binh (Benjamin) Vu & Son Nghiem, 2022. "Economic Growth in Six ASEAN Countries: Are Energy, Human Capital and Financial Development Playing Major Roles?," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    5. Wahidin, Deni & Akimov, Alexandr & Roca, Eduardo, 2021. "The impact of bond market development on economic growth before and after the global financial crisis: Evidence from developed and developing countries," International Review of Financial Analysis, Elsevier, vol. 77(C).
    6. Okuyan Hasan Aydın, 2022. "The Nexus of Financial Development and Economic Growth Across Developing Economies," South East European Journal of Economics and Business, Sciendo, vol. 17(1), pages 125-140, June.
    7. Jagadish Prasad Bist & Nar Bahadur Bista, 2018. "Finance–Growth Nexus in Nepal: An Application of the ARDL Approach in the Presence of Structural Breaks," Vikalpa: The Journal for Decision Makers, , vol. 43(4), pages 236-249, December.
    8. Ehigiamusoe, Kizito Uyi & Lean, Hooi Hooi, 2020. "The role of deficit and debt in financing growth in West Africa," Journal of Policy Modeling, Elsevier, vol. 42(1), pages 216-234.
    9. Naliniprava Tripathy & Shekhar Mishra, 2023. "The Dynamics of Cointegration Between Economic Growth and Financial Development in Emerging Asian Economy: Evidence from India," Vision, , vol. 27(4), pages 485-497, August.
    10. António Afonso & M. Carmen Blanco-Arana, 2022. "Financial and economic development in the context of the global 2008-09 financial crisis," International Economics, CEPII research center, issue 169, pages 30-42.
    11. Chu, Lan Khanh & Chu, Hung Viet, 2020. "Is too much liquidity harmful to economic growth?," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 230-242.
    12. Nguyen, Yen Ngoc & Brown, Kym & Skully, Michael, 2019. "Impact of finance on growth: Does it vary with development levels or cyclical conditions?," Journal of Policy Modeling, Elsevier, vol. 41(6), pages 1195-1209.
    13. Chor Foon Tang & Salah Abosedra, 2020. "Does Financial Development Moderate the Effects on Growth Volatility? The Experience of Malaysia," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(4), pages 361-381, November.
    14. Anne C. Maduka & Kevin O. Onwuka, 2013. "Financial Market Structure and Economic Growth: Evidence from Nigeria Data," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(1), pages 75-98, January.
    15. Vighneswara Swamy & Munusamy Dharani, 2021. "Thresholds in finance–growth nexus: Evidence from G‐7 economies," Australian Economic Papers, Wiley Blackwell, vol. 60(1), pages 1-40, March.
    16. Mandiefe, Piabuo Serge, 2015. "The impact of financial sector development on economic growth: analysis of the financial development gap between Cameroon and South Africa," MPRA Paper 64694, University Library of Munich, Germany.
    17. Tochukwu Timothy Okoli & Ajibola Rhoda Oluwafisayomi, 2019. "Investigating the Banking Sector Development Transmission Mechanism of Financial Development to Growth: Evidence from Sub-Saharan Africa (SSA)," Journal of Economics and Behavioral Studies, AMH International, vol. 11(2), pages 120-131.
    18. Gevaudan,Clement & Lederman,Daniel, 2020. "Stages of Development of Payment Systems : Leapfrogging across Countries and MENA's Place in the World," Policy Research Working Paper Series 9104, The World Bank.
    19. Boubaker, Sabri & Nguyen, Duc Khuong & Piljak, Vanja & Savvides, Andreas, 2019. "Financial development, government bond returns, and stability: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 61(C), pages 81-96.
    20. Kais Mtar & Walid Belazreg, 2021. "Causal Nexus Between Innovation, Financial Development, and Economic Growth: the Case of OECD Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(1), pages 310-341, March.

    More about this item

    Keywords

    International Development;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:afjecr:320584. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://www.ajol.info/index.php/ajer/index .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.