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Financial intermediation and economic growth: evidence from Western Africa

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  • Roger Atindehou
  • Jean Pierre Gueyie
  • Edoh Kossi Amenounve

Abstract

The relationship between finance and economic growth has received considerable attention in economic development literature during recent decades. However, little interest has been devoted to African countries, and specifically, to West African countries. This paper tries to fill that gap, by using causality tests to empirically examine the relationship between finance and economic growth, in the context of West African country members of the Economic Community of West African States (ECOWAS). In all but a few countries, results indicate a weak causal relationship between finance and economic development on one side, and between economic development and finance on the other side. These results imply, ceteris paribus, that leaders of West African countries should focus their economic and monetary policies on the development of financial intermediation, which in turn will favour economic growth.

Suggested Citation

  • Roger Atindehou & Jean Pierre Gueyie & Edoh Kossi Amenounve, 2005. "Financial intermediation and economic growth: evidence from Western Africa," Applied Financial Economics, Taylor & Francis Journals, vol. 15(11), pages 777-790.
  • Handle: RePEc:taf:apfiec:v:15:y:2005:i:11:p:777-790
    DOI: 10.1080/09603100500108030
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    References listed on IDEAS

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    1. Valerie R. Bencivenga & Bruce D. Smith, 1991. "Financial Intermediation and Endogenous Growth," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 195-209.
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    Cited by:

    1. Muhammad Tahir, 2008. "An Investigation of the Effectiveness of Financial Development in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 13(2), pages 27-44, Jul-Dec.
    2. International Monetary Fund, 2007. "Cameroon; Selected Issues," IMF Staff Country Reports 07/287, International Monetary Fund.
    3. Menyah, Kojo & Nazlioglu, Saban & Wolde-Rufael, Yemane, 2014. "Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach," Economic Modelling, Elsevier, vol. 37(C), pages 386-394.
    4. George E. HALKOS & Marianna K. TRIGONI, 2010. "231 Financial And Real Sector Interactions: The Case Of Greece," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(3(13)/Fal), pages 231-246.
    5. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
    6. Wolde-Rufael, Yemane, 2009. "Re-examining the financial development and economic growth nexus in Kenya," Economic Modelling, Elsevier, vol. 26(6), pages 1140-1146, November.
    7. Uddin, Gazi Salah & Sjö, Bo & Shahbaz, Muhammad, 2013. "The causal nexus between financial development and economic growth in Kenya," Economic Modelling, Elsevier, vol. 35(C), pages 701-707.
    8. Halicioglu, Ferda, 2007. "The Financial Development and Economic Growth Nexus for Turkey," MPRA Paper 3566, University Library of Munich, Germany.
    9. Halkos, George, 2010. "Financial and real sector interactions:the case of Greece," MPRA Paper 24391, University Library of Munich, Germany.
    10. Adeniyi, Oluwatosin & Oyinlola, Abimbola & Omisakin, Olusegun & Egwaikhide, Festus O., 2015. "Financial development and economic growth in Nigeria: Evidence from threshold modelling," Economic Analysis and Policy, Elsevier, vol. 47(C), pages 11-21.
    11. George E. Halkos & Marianna K. Trigoni, 2010. "Financial development and economic growth: evidence from the European Union," Managerial Finance, Emerald Group Publishing, vol. 36(11), pages 949-957, September.
    12. Bassam AbuAl-Foul & Ismail Genc & Musa Darayseh, "undated". "On the Causal Link between Financial Development and Economic Growth: Case of Jordan," Economics Working Papers 18-04/2014, School of Business Administration, American University of Sharjah.

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