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Financial Deepening in Ghana; Does Macroeconomics Matter

Author

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  • Alnaa, Samuel Erasmus
  • Matey, Juabin

Abstract

Financial deepening plays a pivotal role in fostering economic growth, alleviating poverty, and mitigating social inequalities. Employing the Vector Autoregressive Model (VAR), this study examines the implications of per capita gross domestic product (GDP), interest rates, and inflation rates for financial deepening (FD) in Ghana. GDP per capita and interest rates exhibit statistically significant impacts on FD in Ghana, whereas inflation exerts an insignificant inverse effect. The statistically significant influence of GDP per capita and interest rates underscores their significance as robust favourable determinants of financial sector development in Ghana. Hence, policymakers are entreated to closely monitor the behaviour of these macroeconomic variables that positively influence financial deepening, as they play crucial roles in fostering economic growth.

Suggested Citation

  • Alnaa, Samuel Erasmus & Matey, Juabin, 2024. "Financial Deepening in Ghana; Does Macroeconomics Matter," MPRA Paper 120974, University Library of Munich, Germany, revised 02 Apr 2024.
    • Handle: RePEc:pra:mprapa:120974
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    More about this item

    Keywords

    Financial Deepening; GDP per capita; Economic Growth; Interest Rate; Inflation; VAR;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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