Financial Sector Reforms and Economic Growth in Ghana: a Dynamic ARDL Model

Owusu, Erasmus L.; Odhiambo, Nicholas M.

doi:10.5709/ce.1897-9254.166

Cited by 10 publications

(10 citation statements)

References 22 publications

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“…Inflation has a negative effect on economic growth, as expected, and the coefficient is significant at 10% level. The result squares well with those of Ahmed (2013), Misati and Nyamongo (2012) and Owusu and Odhiambo (2015). SADC countries have had a history of high inflation, which has often hindered economic growth.…”

Section: Savings and Investmentssupporting

confidence: 84%

“…On the other hand, Akingunola et al (2013) found that the real interest rate has an insignificant impact on economic growth while Gylych (2016) found that lower interest rates have a positive effect on economic growth in Nigeria. Owusu and Odhiambo (2015) concluded that financial reforms have an insignificant impact on economic growth in Ghana, however, capital accumulation is positively associated with economic growth. Similarly, Hye and Wizarat (2013) reported that the real interest rate together with financial liberalisation have a negative effect on economic growth in a study of the effect of financial liberalisation on economic growth in Pakistan.…”

Section: Literature Reviewmentioning

confidence: 99%

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Interest Rate Reforms and Economic Growth in Sadc Countries: The Savings and Investment Channel

Moyo

Roux

2019

SAEB

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The 2008/2009 global financial crisis has re-ignited the debate around financial reforms with contrasting views with regards to the impact of financial reforms on economic growth. This study examines the impact of interest rate reforms on economic growth through savings and investments in SADC countries for the period 1990-2015. Three specifications are used for the analysis; the first one determines the influence of interest rate reforms on savings, the second one analyses the effect of savings on investments while the third one examines whether investments have a positive impact on economic growth. The Pooled Mean Group (PMG) estimation technique is employed for analysis. The results show that interest rate reforms have a positive impact on economic growth through savings and investments. The study therefore recommends that market forces should be allowed to determine real interest rates and furthermore, real interest rates maintained at artificially low levels may harm economic growth.

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Section: Savings and Investmentssupporting

confidence: 84%

Section: Literature Reviewmentioning

confidence: 99%

Interest Rate Reforms and Economic Growth in Sadc Countries: The Savings and Investment Channel

Moyo

Roux

2019

SAEB

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“…In 2003, these reforms were followed up with the Financial Sector Strategic Plan (FINSSP). Other reform policies to follow included the Bank of Ghana Act 2002, Banking Amendment Act 2007, Foreign Exchange Act 2007, Credit Reporting Act 2008and Lender and Borrowers Act 2008 Following the inception of the financial sector reforms, studies have been undertaken to assess its effects on various outcomes such as economic growth (Owusu and Odhiambo, 2015), banking systems (Owusu-Antwi, 2009), banks performance (Antwi-Asare and Addison, 2000) and private sector investment (Ofori-Abebrese and Kamasa, 2013). However, there is a lacuna in the literature with regard to the impact of financial sector reform on the FDI inflows.…”

Section: Introductionmentioning

confidence: 99%

“…Following the inception of the financial sector reforms, studies have been undertaken to assess its effects on various outcomes such as economic growth (Owusu and Odhiambo, 2015), banking systems (Owusu-Antwi, 2009), banks performance (Antwi-Asare and Addison, 2000) and private sector investment (Ofori-Abebrese and Kamasa, 2013). However, there is a lacuna in the literature with regard to the impact of financial sector reform on the FDI inflows.…”

Section: Introductionmentioning

confidence: 99%

The impact of financial sector reforms on foreign direct investment in an emerging economy: empirical evidence from Ghana

Kamasa

Mochiah

Doku

et al. 2020

JHASS

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Purpose This paper aims to empirically investigate the impact that financial sector reforms have on foreign direct investment (FDI) in Ghana. Design/methodology/approach Composite financial sector reform index was constructed, which was made up of various forms of reform policies that were implemented from 1987 to 2016. The auto regressive distributed lag bounds test was used to establish cointegration between variables. Having controlled for other covariates that affect FDI such as trade openness, exchange rate, gross domestic product per capita, inflation and by using the fully modified ordinary least squares method, the estimations are robust as it uses a semi-parametric correction to avoid for any possible issues of endogeneity and serial correlation. Findings Results from the paper reveal that financial sector reform deepening boost FDI with a 2.167% increase in FDI following from a unit percentage improvement of the financial sector reforms. Considering the various categories of reforms, the results reveal that competitive reforms have the highest impact on FDI followed by privatization reforms with positive and significant elasticity coefficients of 2.174% and 0.726%, respectively. Behavioral reforms revealed a positive effect on FDI, albeit insignificant. Originality/value The paper contributes to policy by providing empirical evidence on the effect of financial sector reform on FDI inflows in Ghana. As far as the review of literature is concerned, this paper provides the foremost empirical evidence on the subject with sole emphasis on Ghana. Thus, this paper suggests the deepening of the financial sector reforms, improving competition and maintaining macroeconomic stability.

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“…Therefore, this was the motivating force behind financial deregulation policies in many countries across the world especially in Asia, Africa, and South America. Owusu and Odhiambo (2015) equally expressed the view that the ability of the financial system to enhance the liquidity of securities and stimulate savers to hold their wealth in productive assets (debentures, stocks, and preferential stock) would be greatly enhanced. It led to increase in productive capacity and investment with a resultant increase in economic growth.…”

Section: Introductionmentioning

confidence: 99%

Financial Sector Reforms and Economic Growth: Evidence from Nigeria

Olowofela

Adebowale

Adejonwo

2018

Binus Business Review

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This research analyzed the impact of financial reforms on economic growth in Nigeria. The scope of this research covered the period between1986– 2016.This period was chosen because liberalization of Nigeria financial sector began in 1986 with the introduction of Structural Adjustment Programme (SAP), which policy thrust included deregulation of interest rates. Secondary data were collected from Central Bank of Nigeria statistical bulletin and National Bureau of Statistics publications. This research used econometrics analysis. Ordinary Least Squares (OLS) technique and Cochrane Orcutt iterative method were used to analyze the data. The results show that implemented financial reforms during the period has positive impact on economic growth. This research recommends that government should enhance financial reforms and macroeconomic stability and be sensitive to the behavior of interest rates especially, lending rates for overall economic growth in the country.

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Financial Sector Reforms and Economic Growth in Ghana: a Dynamic ARDL Model

Cited by 10 publications

References 22 publications

Interest Rate Reforms and Economic Growth in Sadc Countries: The Savings and Investment Channel

Interest Rate Reforms and Economic Growth in Sadc Countries: The Savings and Investment Channel

The impact of financial sector reforms on foreign direct investment in an emerging economy: empirical evidence from Ghana

Financial Sector Reforms and Economic Growth: Evidence from Nigeria

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