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Finance–growth nexus in sub-Saharan Africa revisited: evidence based on a new composite index

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  • Olufemi Adewale Aluko

    (University of Ilorin)

  • Olufemi Patrick Adeyeye

    (Federal University)

  • Patrick Olajide Oladele

    (Federal University)

Abstract

In this paper, we use a panel dataset of 33 countries to revisit the finance–economic growth nexus in sub-Saharan Africa for the period 1990–2015. Unlike previous studies, we proxy finance with a composite index of financial development which accounts for the multidimensionality of financial development. Also, we consider real sector growth in our empirical analyses. We establish long-run relationships between finance and (real sector and economic) growth. We provide evidence to show that finance and (real sector and economic) growth cause each other. Overall, the findings suggest that the finance (real sector and economic)–growth nexus is sensitive to the choice of econometric methodology.

Suggested Citation

  • Olufemi Adewale Aluko & Olufemi Patrick Adeyeye & Patrick Olajide Oladele, 2020. "Finance–growth nexus in sub-Saharan Africa revisited: evidence based on a new composite index," Economic Change and Restructuring, Springer, vol. 53(2), pages 333-355, May.
    • Handle: RePEc:kap:ecopln:v:53:y:2020:i:2:d:10.1007_s10644-019-09253-9
    DOI: 10.1007/s10644-019-09253-9
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    3. Clement Olalekan Olaniyi & James Temitope Dada & Nicholas Mbaya Odhiambo & Xuan Vinh Vo, 2023. "Modelling asymmetric structure in the finance-poverty nexus: empirical insights from an emerging market economy," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 453-487, February.
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    More about this item

    Keywords

    Finance; Economic growth; Real sector growth; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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