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Financial Development and Economic Complexity in South Africa

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  • Chuma Maxwele

    (Nelson Mandela University)

Abstract

South Africa’s financial sector is ranked among the best in the world, as its financial systems are sophisticated, organised and well developed. However, the question is: can South Africa take advantage of its ro- bust financial sector to advance the economic complexity of the country? This study examines the impact of financial development on economic complexity in South Africa from year 1995 to 2022 using the fully modified least square (FMOLS) model. The results of the study show that financial development has a negative impact on economic com- plexity, implying that a stronger financial sector does not necessarily translate into higher sophistication. Thus, to improve complexity in the country, the government must improve its institutional settings, which will later lead to an increase in capital investment.

Suggested Citation

  • Chuma Maxwele, 2025. "Financial Development and Economic Complexity in South Africa," Africagrowth Agenda, Africagrowth Institute, vol. 22(3), pages 4-7.
    • Handle: RePEc:afj:journ2:v:22:y:2025:i:3:p:4-7
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-afgrow_v22_n3_a1
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