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Lightening the Path to Financial Development: The Power of Electricity

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  • Pan, Lei
  • Dwumfour, Richard Adjei
  • Kheng, Veasna

Abstract

This paper examines the impact of access to electricity on financial development. In doing so, we use plausibly exogenous variations in population density as an instrument for electrification rate. Using panel data for 44 countries in Sub-Saharan Africa over the period 2000 to 2018, the results suggest that more people having access to electricity can promote financial development. In addition, mobile phone and commercial bank branches diffusion serve as potential channels through which access to electricity affects financial development. The results have important implications for policies in overcoming barriers to electricity access.

Suggested Citation

  • Pan, Lei & Dwumfour, Richard Adjei & Kheng, Veasna, 2022. "Lightening the Path to Financial Development: The Power of Electricity," MPRA Paper 113358, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113358
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    More about this item

    Keywords

    Access to electricity; Financial development; Sub-Saharan Africa; Population density;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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