Financial Liberalization, Institutional Quality and Economic Growth Nexus: Panel Analysis of African Countries

The present article has investigated the impact of financial liberalization and institutional quality on economic growth in Africa from 1996 to 2021. The estimated results of the study show that the availability of physical capital, total labor force participation, political stability, and effectiveness of the government have a positive and significant impact on the economic growth of the selected countries. The availability of physical capital and total labor force participation have a bidirectional causal relationship with economic growth. Financial liberalization has an insignificant impact on the economic growth of African countries. The study recommends that to enhance economic growth in Africa, the governments of the African countries should manage physical capital, raise the number of skilled labor force participation and promote institutional quality at the same time. Moreover, to get the true benefit of financial liberalization, African nations should control the negative effect of financial liberalization so that this economic growth can be achieved.