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Banking development, human capital and economic growth in Sub‐Saharan Africa (SSA)

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  • Mobolaji Hakeem I.

Abstract

Purpose - The purpose of this paper is to investigate the relevance of three economic growth theories in Sub‐Saharan Africa economies. Design/methodology/approach - This empirical paper employs a panel data framework, using fixed effect, random effects and maximum likelihood estimation techniques. It further conducts some sensitivity analyses. Findings - The paper finds that both the stock of human capital (HC) and the physical capital are important for growth in the region, the paper does not find strong impact of financial development (FD) in the region, perhaps due to long period of financial repression or financial underdevelopment in the region. It however finds strong complementarity features in interaction of both finance and HC on growth. Research limitations/implications - The analysis in the paper is confined to banking development indicators, due to inadequate data for capital market indicators as well as underdevelopment of the stock market in the region. Practical implications - The policy regime since the mid‐1980 s (Structural Adjustment Programme, SAP, era) is to reduce government investment and involvement in economic activities; this paper however suggests that this measure has to be carefully considered especially with due concern for the trade off between short‐run adjustment programmes and long‐run stabilisation policies. The paper advocates for more efficient and effective investment in HC and FD in the region. Originality/value - It is believed that this is the first time such a study has been carried out, testing the relevance of three growth theories and further testing an interaction of two different theories in a growth model.

Suggested Citation

  • Mobolaji Hakeem I., 2010. "Banking development, human capital and economic growth in Sub‐Saharan Africa (SSA)," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 37(5), pages 557-577, September.
    • Handle: RePEc:eme:jespps:v:37:y:2010:i:5:p:557-577
    DOI: 10.1108/01443581011075479
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    Citations

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    Cited by:

    1. Balcilar, Mehmet & Gupta, Rangan & Lee, Chien-Chiang & Olasehinde-Williams, Godwin, 2018. "The synergistic effect of insurance and banking sector activities on economic growth in Africa," Economic Systems, Elsevier, vol. 42(4), pages 637-648.
    2. Mohd Anwar & Imlak Shaikh, 2018. "Banking Expansion and Income Growth in India," Sustainability, MDPI, vol. 10(8), pages 1-18, August.
    3. Roseline Tapuwa Karambakuwa & Ronney Ncwadi & Andrew Phiri, 2020. "The human capital–economic growth nexus in SSA countries: what can strengthen the relationship?," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 47(9), pages 1143-1159, July.
    4. Mohsen MOHAGHEGH & A.S. VALIPOUR, 2020. "Income-dependent impacts of financial development and human capital on economic growth. A non-stationary panel analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(625), W), pages 263-274, Winter.
    5. PV Viswanath, 2018. "Microfinance and the Decision to Invest in Children’s Education," IJFS, MDPI, vol. 6(1), pages 1-20, February.
    6. Kong Yusheng & Jonas Bawuah & Agyeiwaa O. Nkwantabisa & Samuel O. O. Atuahene & George O. Djan, 2021. "Financial development and economic growth: Empirical evidence from Sub‐Saharan Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3396-3416, July.
    7. Sergio Salas & Kathleen Odell, 2020. "Financial Deepening, Credit Crises, Human Capital and Growth," Working Papers 2020-01, Escuela de Negocios y Economía, Pontificia Universidad Católica de Valparaíso.
    8. Marinko Škare & Sabina Lacmanovic, 2015. "Human capital and economic growth: a review essay," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(39), pages 735-735, May.

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