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Does financial development improve structural transformation in Africa? A long and short term analysis

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  • Thierry Mamadou Asngar

    (University of N’Djamena)

Abstract

This study analyzes the effect of financial development on structural transformation in Africa over the period 1990–2022. The sample is made up of 54 African countries. We conduct a study of the long and short term. Key indicators examined include manufacturing value added, M2 money supply and bank credit. Three estimation techniques are applied to obtain the basic results. The results indicate an overall significant positive effect of financial development on structural transformation. However, negative effects of money supply growth on manufacturing value added are obtained. The negative coefficients for the long-run variables suggest that delays in financial development slow down the process of structural transformation. Transmission channels (expenditure on transport infrastructure, presence of railroads and access to information and communication technologies) are employed. The results then show changes. We recommend that the authorities strengthen financial development and make finance more inclusive.

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  • Thierry Mamadou Asngar, 2025. "Does financial development improve structural transformation in Africa? A long and short term analysis," SN Business & Economics, Springer, vol. 5(7), pages 1-26, July.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:7:d:10.1007_s43546-025-00839-2
    DOI: 10.1007/s43546-025-00839-2
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    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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