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Financial development and economic growth: the case of ECOWAS and WAEMU

Author

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  • Komivi Afawubo

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Vincent Fromentin

    (CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

Abstract

his study examines empirically the relationship between financial development and economic growth in the West African Economic and Monetary Union (WAEMU) for the period 1981-2010. Using the General Moment Method (GMM), the study found a positively and statistically significant effect of financial development on economic growth and the causality was bidirectional. In addition, the variable primary completion rate, foreign direct investment and real exchange rate contribute positively to economic growth in the region while inflation and openness discourage the economic growth in the region. In order to maintain a sustainable economic growth in those countries under study, the reforms for financial system improvement and education sector should be implemented. The policy makers should pursue target macroeconomic policies that may attract foreign direct investment while controlling for inflation and trade openness.

Suggested Citation

  • Komivi Afawubo & Vincent Fromentin, 2013. "Financial development and economic growth: the case of ECOWAS and WAEMU," Post-Print hal-01369146, HAL.
    • Handle: RePEc:hal:journl:hal-01369146
    DOI: 10.5897/AJBM2015.7861
    Note: View the original document on HAL open archive server: https://hal.univ-lorraine.fr/hal-01369146
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    References listed on IDEAS

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    Cited by:

    1. Peterson K. Ozili & Jide Oladipo & Paul Terhemba Iorember, 2022. "Effect of abnormal credit expansion and contraction on GDP per capita in ECOWAS countries," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(3), November.

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    More about this item

    Keywords

    Gestion des entreprises; Economie financière;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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