Effect of financial development on economic growth in sub-Saharan Africa
By Muazu Ibrahim, P. Alagidede. Journal of Policy Modeling, 2018
313 citations recorded by the source corpus.
Abstract This paper examines the overall economic growth effect when the growth in finance and real sector is disproportionate relying on panel data for 29 sub-Saharan African countries over the period 1980–2014. Results from the system generalized methods of moments (GMM) reveal that, while financial development supports economic growth, the extent to which finance helps growth depends crucially on the simultaneous growth of real and financial sectors. The elasticity of growth to changes in either size of the real or financial sector is higher under balanced sectoral growth. We also show that rapid and unbridled credit growth comes at a huge cost to economic growth with consequences stemming from financing of risky and unsustainable investments coupled with superfluous consumption fueling inflation. However, the pass-through excess finance–economic growth effect via the investment channel is stronger.
Subfields: Accounting, Economics and Econometrics, Information Systems
View Paper: https://www.semanticscholar.org/paper/6b0f1d6feedfdba64738de554cbd17765bc95b25
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
In Information Systems
Citations in the corpus
- Role of natural resource abundance, international trade and financial development in the economic development of selected countries (2020, background): “The first view looked at supply-side leading and demand-side following hypotheses (Ibrahim and Alagidede, 2018 and Muhammad et al, 2016). The supply-leading view was hypothesised as the development of a robust financial sector contributing to economic growth while the demand-following view contended”