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Moderating analysis of financial policy, real interest rate and economic performance in Middle East & North Africa and Sub-Saharan Africa Countries

Author

Listed:
  • Osegbue Ifeanyi Francis

    (Nnamdi Azikiwe University, Nigeria)

  • Abobaker Mohmed

    (Kemmy Business School, University of Limerick, Ireland, United Kingdom)

  • Obiora Fabian

    (Chukwuemeka Odumegwu Ojukwu University, Igbariam, Anambra State, Nigeria)

  • John-Akamelu Chitom Racheal

    (Nnamdi Azikiwe University, Nigeria)

  • Obasi John Ogbonnia

    (ANAN University, Nigeria)

  • Nwoye Chizoba Mary

    (Nnamdi Azikiwe University, Nigeria)

  • Onyeogubalu Ogochukwu Nkiru

    (Nnamdi Azikiwe University, Nigeria)

Abstract

Subject and purpose of work This study investigates the interplay between financial policy and real interest rates and their impact on economic performance in MENA and SSA countries. It aims to determine whether financial policy supports economic performance and how its interaction with real interest rates amplifies or moderates its effect. Materials and methods The research applies both static (Pooled OLS and Fixed Effects) and dynamic systems GMM estimation techniques on a panel dataset of 70 countries across 21 years (2000-2020). Results Results indicate that domestic credit to the private sector by banks positively contributes to economic performance, with real interest rates intensifying this effect. However, real interest rates, when combined with domestic credit, show both positive and negative net effects on economic performance, especially in financially constrained economies with low and negative real interest rates. Conclusions Notably, thresholds for real interest rates–such as 5.5%–are identified, above which the net impact on economic performance can shift from negative to positive.

Suggested Citation

  • Osegbue Ifeanyi Francis & Abobaker Mohmed & Obiora Fabian & John-Akamelu Chitom Racheal & Obasi John Ogbonnia & Nwoye Chizoba Mary & Onyeogubalu Ogochukwu Nkiru, 2025. "Moderating analysis of financial policy, real interest rate and economic performance in Middle East & North Africa and Sub-Saharan Africa Countries," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 18(1), pages 15-35.
  • Handle: RePEc:vrs:ecoreg:v:18:y:2025:i:1:p:15-35:n:1002
    DOI: 10.2478/ers-2025-0002
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    Keywords

    Sub-Saharan Africa; financial policy; economic performance; real interest rate; Middle East & North Africa;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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