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Monetization, Financial Development, and Growth: Time Series Evidence from 22 Countries in Sub-Saharan Africa

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  • Rousseau, Peter L.
  • D’Onofrio, Alexandra

Abstract

Does financial development enable economic growth in developing countries? We find evidence for this in sub-Saharan Africa, a region where there is an urgent need to promote growth. Using a modern time series methodology and data for 22 countries over the period from 1960 to 2009, we find unidirectional links from financial development to measures of real activity for about two-thirds of them. In most cases the effects come from narrow money rather than more broadly-defined financial aggregates. This suggests that monetization plays a distinct role in capital accumulation and growth in many of these countries.

Suggested Citation

  • Rousseau, Peter L. & D’Onofrio, Alexandra, 2013. "Monetization, Financial Development, and Growth: Time Series Evidence from 22 Countries in Sub-Saharan Africa," World Development, Elsevier, vol. 51(C), pages 132-153.
  • Handle: RePEc:eee:wdevel:v:51:y:2013:i:c:p:132-153 DOI: 10.1016/j.worlddev.2013.05.016
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    References listed on IDEAS

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    Cited by:

    1. Beck, Thorsten & Demirgüç-Kunt, Asli & Singer, Dorothe, 2013. "Is Small Beautiful? Financial Structure, Size and Access to Finance," World Development, Elsevier, pages 19-33.
    2. Katarzyna Burzynska & Olle Berggren, 2015. "The Impact of Social Beliefs on Microfinance Performance," Journal of International Development, John Wiley & Sons, Ltd., pages 1074-1097.
    3. King, Alan & Ramlogan-Dobson, Carlyn, 2015. "Is Africa Actually Developing?," World Development, Elsevier, pages 598-613.
    4. repec:ebl:ecbull:eb-16-00819 is not listed on IDEAS
    5. Eléazar Zerbo, 2015. "What determines the long-run growth in Sub-Saharan Africa? Exploring the role of energy, trade openness and financial development in six countries," Working Papers hal-01238524, HAL.

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