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Institutions and financial development in ECOWAS

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  • Olufemi Adewale Aluko
  • Muazu Ibrahim

Abstract

Earlier studies on institutions and financial sector development are less informative given their failure to examine how the different forms of institutions influence countries’ level of domestic financial development. In this study, we re-examine the impact of institutions on financial development in the ECOWAS regional bloc over the period 1995–2015. Employing the Augmented Mean Group (AMG) estimator, we show that overall institutions do not have a significant impact on financial development. However, after disaggregating the level of institutions into market-creating, market-legitimizing, market-stabilizing, and market-regulating, we find that only the effect of market-legitimizing institutions significantly enhances financial sector development. Thus, the impact of institutions on financial development is sensitive to the form of institutions. We discuss key implications for policy.

Suggested Citation

  • Olufemi Adewale Aluko & Muazu Ibrahim, 2021. "Institutions and financial development in ECOWAS," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 11(2), pages 187-198, April.
    • Handle: RePEc:taf:jsustf:v:11:y:2021:i:2:p:187-198
    DOI: 10.1080/20430795.2020.1717240
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    Cited by:

    1. Chengyonghui, Duan & Ni, Soh Wei & San, Ong Tze & Rahim, Norhuda BT Abdul, 2023. "What role public debt plays to moderate the influence of natural resources on financial development? Appraising Resource-Curse Hypothesis in MENA Region," Resources Policy, Elsevier, vol. 86(PA).
    2. Yang, Xue & Zhang, Peng & Zhao, Zuoxiang & Koondhar, Mansoor Ahmed, 2024. "How disaggregated natural resources rents affect financial development: From the perspective of sustainable development," Resources Policy, Elsevier, vol. 92(C).
    3. Bruno Emmanuel Ongo Nkoa & Thierry Mamadou Asngar & Charles Christian Atangana Zambo & Donald Ferdinand Okere Atanga, 2023. "Does institutional quality accelerate the growth of financial markets in Africa?," SN Business & Economics, Springer, vol. 3(4), pages 1-26, April.

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