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Financing Africa’s DevelopmentFinancial Sector Development and Economic Growth: The Case of ECOWAS Countries

Financing Africa’s Development: Financial Sector Development and Economic Growth: The Case of... [This paper empirically investigates the change in the relationship between economic growth and financial development as ECOWAS economies grow over the period 1991–2017. The methodology of analysis is the quantile regression, which allows determining the impact of financial development at different levels of economic growth. Financial development is measured by private sector credit to GDP and liquid liabilities to GDP. The results indicate that financial development plays a positive and significant role in economic growth process regardless of the level of economic development. The size of the impact of financial development depends on its measure as well as the specification of the model. Our findings also indicate that the impact of finance increases with the level of economic growth between the 10th and the 90th percentile. Moreover, when country fixed effects are taken into consideration, the impact of finance rises significantly at the lowest percentiles of economic development, while it remains relatively stable at medium and high levels of economic development. Finally, the findings point out the absence of linearity in the linkage between finance and economic growth.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

Financing Africa’s DevelopmentFinancial Sector Development and Economic Growth: The Case of ECOWAS Countries

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Publisher
Springer International Publishing
Copyright
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020
ISBN
978-3-030-46481-3
Pages
135 –154
DOI
10.1007/978-3-030-46482-0_8
Publisher site
See Chapter on Publisher Site

Abstract

[This paper empirically investigates the change in the relationship between economic growth and financial development as ECOWAS economies grow over the period 1991–2017. The methodology of analysis is the quantile regression, which allows determining the impact of financial development at different levels of economic growth. Financial development is measured by private sector credit to GDP and liquid liabilities to GDP. The results indicate that financial development plays a positive and significant role in economic growth process regardless of the level of economic development. The size of the impact of financial development depends on its measure as well as the specification of the model. Our findings also indicate that the impact of finance increases with the level of economic growth between the 10th and the 90th percentile. Moreover, when country fixed effects are taken into consideration, the impact of finance rises significantly at the lowest percentiles of economic development, while it remains relatively stable at medium and high levels of economic development. Finally, the findings point out the absence of linearity in the linkage between finance and economic growth.]

Published: Jun 25, 2020

Keywords: Financial development; Growth; Quantile regression; G21; O4; C11

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