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Financial Institutions Dynamics, Investments and Development

Author

Listed:
  • Rexford Abaidoo
  • Elvis Kwame Agyapong

Abstract

The study evaluates how specific features of financial institutions and investment sources influence enduring development among economies in the sub-region of Sub-Saharan Africa (SSA). Data for the interactions in question were compiled from 36 economies in SSA from 1996 to 2019, and various empirical estimates were carried out using the two-step system Generalized Method of Moments statistical framework. Results from the analyses suggest that growth in depth, improved access, and efficiency of financial institutions foster long-term development among economies in the sub-region. Investments in various forms were found to have a varied augmenting impact on long-term development. Further empirical analyses suggest that quality of governance has a significant positive moderating impact on how net foreign direct investment and domestic investments influence development among economies in the sub-region. Political instability is, however, found to negate gains to development from both investment growth and contributions from financial institutions. JEL Codes: C33, G2, E13

Suggested Citation

  • Rexford Abaidoo & Elvis Kwame Agyapong, 2023. "Financial Institutions Dynamics, Investments and Development," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 22(3), pages 247-271, September.
    • Handle: RePEc:sae:emffin:v:22:y:2023:i:3:p:247-271
    DOI: 10.1177/09726527231160856
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G2 - Financial Economics - - Financial Institutions and Services
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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