Financial development and economic growth in sub-Saharan Africa: A sectoral perspective
Date
2021-06-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Taylor & Francis Group
Abstract
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.
Description
CITATION: Yazidu Ustarz & Ashenafi Beyene Fanta | (2021) Financial development and economic growth in sub-Saharan Africa: A sectoral perspective, Cogent Economics & Finance, 9:1,1934976, doi: 10.1080/23322039.2021.1934976
The original publication is available at: tandfonline.com
The original publication is available at: tandfonline.com
Keywords
Financial development, Threshold, Generalised method of moments, Seemingly unrelated regression, sub-Saharan Africa
Citation
Yazidu Ustarz & Ashenafi Beyene Fanta | (2021) Financial development and economic growth in sub-Saharan Africa: A sectoral perspective, Cogent Economics & Finance, 9:1,1934976, doi: 10.1080/23322039.2021.1934976