Financial Development, Real Sector and Economic Growth in Sub-Saharan Africa: The Threshold Effect

Akinlo, Taiwo

doi:10.1080/15228916.2020.1773608

Cited by 14 publications

(6 citation statements)

References 38 publications

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“…A group of studies further looked at the possibility of causal relationships (for example, Aluko et al, 2020;Okunlola et al, 2020), but the results were mixed. In addition, some studies examined the non-linear relationship (see, for instance, Ibrahim & Alagidede, 2018;Taiwo, 2020). However, the existing studies have largely focused on aggregate growth with little evidence on whether the impact of finance could vary across different sectors of the economy.…”

Section: Review Of Literaturementioning

confidence: 99%

Financial development and economic growth in sub-Saharan Africa: A sectoral perspective

Ustarz

Fanta

2021

Cogent Economics & Finance

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Research on the impact of financial development on economic growth remains inconclusive. Previous empirical examination of the link is based on aggregate GDP on the presumption that each economic sector responds identically to financial development. However, the extent of credit utilisation, as well as productivity of credit, may not necessarily remain the same across sectors. This study therefore seeks to contribute to the literature by examining the effect of financial development across sectors in sub-Saharan Africa using the Generalised Method of Moments (GMM) over the period 1990-2018. Indeed, the findings show that while financial development has a positive effect on the service and agricultural sectors, a certain threshold of financial development must be reached before it can positively contribute to the growth of the industrial sector. The findings are robust to a different estimation technique. With the industrial sector considered critical for economic transformation, our findings imply that policymakers in sub-Saharan Africa need to continue to promote financial development to spur industrialization.

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Section: Review Of Literaturementioning

confidence: 99%

Financial development and economic growth in sub-Saharan Africa: A sectoral perspective

Ustarz

Fanta

2021

Cogent Economics & Finance

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“…Before the worldwide financial crisis, which occurred between 2007 and 2009, the majority of studies found a positive link between FD and economic development (King and Levine, 1993a, 1993b; Bassanini et al , 2001; Leahy et al , 2001). Numerous studies published after the global financial crisis found a negative connection between FD and economic growth, including those by Adeniyi et al (2015), Allen et al (2014), Cecchetti and Kharroubi (2012), Ductor and Grechyna (2015), Akinlo (2021) and Yinusa et al (2022). The inverse relationship between FD and economic growth has been attributed to some factors.…”

Section: Resultsmentioning

confidence: 99%

Does institutional quality modulate the effect of capital flight on economic growth in sub-Saharan Africa?

Akinlo

2023

JMLC

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Purpose Sub-Saharan African (SSA) region has been battling illegal outflow of capital over the years, with little success recorded so far. Without adequate attention, unemployment, infrastructure deficiencies and inefficient capital might be worse in the future. The purpose of this study is to investigate if institutional quality mitigates the effect of capital flight (CF) on economic growth. Design/methodology/approach The panel data from 26 SSA countries spanning 1998 to 2018 are used. The analysis of this study was carried out through a two-step generalized method of moments technique. The principal component index is used to group the institutional quality/governance indicators into three categories: political governance, economic governance and institutional governance. Findings The study found that CF is harmful to the economic growth of the SSA region. The study also found that, among the indicators of institutional quality, only the rule of law and control of corruption stimulate economic growth. Contrary to expectation, the finding indicates that institutional quality does mitigate the effect of CF on economic growth in the SSA region. Originality/value This study provides an insight into the relevance of institutional quality in mitigating CF in sub-Saharan African region.

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“…Second, the literature on African business is consistent with the imperative to improve domestic financial development (Tchamyou, 2019;Taiwo, 2021) especially after failed attempts by privatisation policies to attract foreign capital (Fasakin, 2021). The need for domestic sources of investment aligns with the post-2015 inclusive and sustainable development agenda in the sense that external sources of finance like loans and foreign direct investment (Asongu & Tchamyou, 2015) are associated with exclusive human development and inequality respectively, in Africa.…”

Section: Introductionmentioning

confidence: 84%

Information Sharing and Banking Efficiency in Africa: A Disaggregated Panel Data Analysis

Asongu

Odhiambo

2022

SSRN Journal

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Financial Development, Real Sector and Economic Growth in Sub-Saharan Africa: The Threshold Effect

Cited by 14 publications

References 38 publications

Financial development and economic growth in sub-Saharan Africa: A sectoral perspective

Financial development and economic growth in sub-Saharan Africa: A sectoral perspective

Does institutional quality modulate the effect of capital flight on economic growth in sub-Saharan Africa?

Information Sharing and Banking Efficiency in Africa: A Disaggregated Panel Data Analysis

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