This paper examines the role institutional quality plays amongst the empirical drivers of income inequality in Africa. Using a dynamic two-step difference GMM with robust standard errors over the period 1990-2017, we find no statistically significant effect of institutions in general, on income inequality. However, we find that institutional quality indicators such as control of corruption and the strict enforcement of the rule of law significantly reduce income inequality. We also find no statistically significant effects of the other institutional quality indicators such as government effectiveness, voice and accountability, regulatory quality and political stability on income inequality in our sample. We suggest that more premium be placed on corruption control and the stringent adherence to the rule of law in ensuring equitable distribution of income in Africa. Furthermore, we re-echo suggestions that promote institutional development in Africa as institutions in general remain very weak.

This study empirically investigates whether the level of human development drives greater financial inclusion, and vice versa in the contexts of frontier markets. The dynamic panel generalized methods of moments (System‐GMM) methodology is employed to analyze data spanning from 2005 to 2014 for twenty (20) frontier markets by Standard and Poor's Indices. The study finds that human development is a catalyst for financial inclusion scale‐up in the banking industry, which in turn, augments the development process. It establishes fresh evidence that income level, financial literacy, and healthy lives are the decisive factors for financial inclusion scale‐up in the banking industry. It finds new evidence that the underlying cause of low financial inclusion is low human development. The study concludes that low human development causes low financial inclusion. Also, promoting financial inclusion through the banking sector is very instrumental to stimulating human development, thus the reverse applies in frontier markets. The study implies that low living standards, poor health, high illiteracy, and deprived well‐being and freedom largely account for low financial inclusion hence its spillover effect of having low human development in frontier market countries.

This paper investigated the effect of exchange rate regime on FDI inflows in Ghana. We modelled the causal relationship between FDI inflows and exchange rate regimes over a 39 year period . The paper employed the Ordinary Least Squares and the Cointegration technique to investigate the phenomenon. The variables were checked for stationarity after which a parsimonious Error-Correction model was estimated. Our findings indicated that exchange rate regime has no discernible effect on Ghana's FDI. At best, the link is weak since it was only found to be significant at the 10% level. Democracy was found to have the expected positive sign and to be a robust determinant of FDI in Ghana. By implication, Ghana's quest to attract FDI should go hand in hand with her efforts at sustaining the ongoing democracy. The contribution of this paper to the empirical literature lies in modelling exchange rate regimes and FDI inflows to Ghana. Previous studies on Ghana had concentrated on exchange rate misalignment and pass-through and their effect on FDI. Unravelling the empirical relationship between the FDI and exchange rate regime nexus on Ghana makes modest contribution to the empirical literature.

This study explores the long‐run impact of idiosyncratic and common shocks on industry output in Ghana while controlling for the effects of investment. In order to deal with the second‐order bias problem, this study employed canonical cointegration and fully modified ordinary least‐squares (OLS) regressions, which are more robust to second‐order bias problems. Different models are, therefore, specified and estimated. Fully modified OLS and canonical cointegration are extended in successive steps in order to verify if the inclusion of idiosyncratic and common shocks improves the statistical properties of the model. Secondly, a backward approach, in which idiosyncratic and common shocks are excluded successively, is also adopted. Preliminary findings showed signs of long‐run equilibrium. The a priori expectation and the statistical importance of investment are established in both fully modified OLS and canonical cointegration models. This result is robust using both the Bartlett and Parzen kernels. However, while the elasticity value for investment is invariant to the model and kernel type used for fully modified OLS, the opposite result is found for canonical cointegration. Importantly, the absolute value of the investment elasticity is kept within the limits of 0 and 1. The impacts of idiosyncratic and common shocks are negative and statistically significant in the long run for both fully‐modified OLS and canonical cointegration. This result is robust to the Bartlett and Parzen kernels. Result based on the fully modified OLS also showed that the sizes of the elasticity values for both idiosyncratic and common shocks are sensitive to the model type and kernel type used. Despite the differences in the elasticity values, result for both models are qualitatively similar.

This study investigates the impact of liberalization of the forex exchange and financial sectors and external prudent fiscal management in Côte d'Ivoire on Ghana's inflation. We find that, in the financial sector, there is a case for liberalization, in terms of lowering inflation. However, a quasi-liberalized system in the sector proves to have a greater potential to reduce inflation in Ghana. In the exchange market, non-liberalization has the edge over liberalization in reducing inflation in Ghana. However, a quasi-liberalized system in the sector has a greater potential to lower inflation. There is evidence of a strong intra-continental transfer of inflation from Côte d'Ivoire to Ghana, but this transmission has been significantly moderated downwards by the implementation of prudent fiscal management in Côte d'Ivoire. We also find that monetary targeting and inflation targeting have deflationary effects, but we cannot claim that this has significantly reduced inflation. The implication of the result is that; a system that achieves the correct balance between the market mechanism and command system in the exchange and financial sectors has a greater potential to lower inflation in Ghana. Also, domestic monetary policies should not only be anchored on internal factors.