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Effect of financial sector development and institutions on economic growth in SSA. Does the peculiarities of regional blocs matter?

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  • Mahawiya Sulemana
  • John Bosco Dramani

Abstract

The link between financial sector development (FSD) and economic growth has generated a great deal of interest among academics. Some studies argued that financial sector stimulates growth while others suggested the opposite. Thus, we conducted a comparative analysis of the effect of FSD on economic growth between Economic Community of West African States (ECOWAS) and Southern African Development Community (SADC). In addition, we sought to find out the transmission of FSD through institutional development on economic growth. The results suggested the existence of FSD-led growth in SADC but revealed no statistically significant effect in ECOWAS. Furthermore, the effect of FSD through institutional development supported a positive complementarity effects on growth in both regions but only statistically significant in ECOWAS, suggesting strong institutions complemented FSD effects on growth. We recommended that ECOWAS take steps to improve both political structures and democratic dispensation to boost the development of the financial sector.

Suggested Citation

  • Mahawiya Sulemana & John Bosco Dramani, 2022. "Effect of financial sector development and institutions on economic growth in SSA. Does the peculiarities of regional blocs matter?," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 12(4), pages 1102-1124, October.
    • Handle: RePEc:taf:jsustf:v:12:y:2022:i:4:p:1102-1124
    DOI: 10.1080/20430795.2020.1837500
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    Cited by:

    1. IWASAKI, Ichiro & ONO, Shigeki, 2023. "Economic Development and the Finance-Growth Nexus : A Meta-Analytic Approach," CEI Working Paper Series 2023-06, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

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