Financial Deepening and Economic Growth Dynamics: Empirical Evidence from the West African Monetary Zone
This paper empirically examines the dynamic relationship between financial deepening and economic growth in a monetary union. We find positive but weak evidence of impacts of financial deepening on growth for Gambia, Gabon and Sierra Leone. There is no evidence of any positive significant impact for Ghana and Nigeria. We argue that, the weak evidence between financial deepening and economic growth can be a consequence of the inability of assessing credit (long-term loans), credit worthiness, lack of information and low level of bank deposits by the private sector despite the improvement in the financial sector.
Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1123662Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 1286
 Abdullahi D. A., and K. K. Mmolainyane. 2014. Financial integration, capital market development and economic Performance”: Empirical evidence from Botswana. Journal of Economic Modelling, 42:1-14.
 Abu-Bader, S. and Abu-Qarn, A.S. 2007. Financial development and economic growth: The Egyptian experience. Journal of Policy Modelling, 30: 887–898.
 Afolabi J. and H. Mamman. 1994. The Dynamics of Savings in a Deregulated Economy: The case of Nigeria. NDIC Quarterly 4(4): 16-27.
 Agbloyor, E. K., Abor, J.Y., Delali Adjasi, C.K and Yawson, A. 2014. Private capital flows and economic growth in Africa: The role of domestic financial markets. Journal of International Financial Markets, Institutions and Money, 30:137–152.
 Al-Yousif, Y. K .2002. Financial development and economic growth: Another look at the evidence from developing countries. Review of Financial Economics, 11 (2):131–150.
 Anwar, S. and Sun, S. 2011. Financial development, foreign investment and economic Growth in Malaysia. Journal of Asian Economics, 22: 335–342.
 Aryeetey, E., and F. Gockel. 1990. Mobilizing Domestic Resources for Capital Formation in Ghana: the role of informal financial market. AERO Research paper 3, Nairobi.
 Bailliu, J. N. 2000. Private capital flows, Financial Development and Economic growth in Developing Countries. Bank of Canada Working Paper 15.
 Bank of Ghana Statistical Bulletin. 2014.
 Bank of Sierra Leone. 2014.
 Bawumia, M. 2010. Monetary Policy and Financial Sector Reform in Africa: Ghana’s Experience. Combert Impressions Ghana Ltd., Accra, Ghana.
 Brownbridge, M., & Kirkpatrick, C. 2002. Financial regulation and supervision in developing countries: An overview of the issues. Development Policy Review, 20(3), 243-245.
 Central Bank of Nigeria Statistical Bulletin.2006.
 Central Bank of Nigeria Statistical Bulletin.2014.
 Colombage, S.R.N. 2008. Financial markets and economic performances: Empirical evidence from five industrialized economies. Research in International Business and Finance, 23, 339-348.
 Demetriades, P. O. and Hussein, K.1996. Does financial development cause economic growth? Time-series evidence of 16 countries. Journal of development economics, 51:387-411.
 Demetriades, P. O., & James, G. A. 2011. Finance and growth in Africa: The broken link. Economics Letters, 113(3), 263-265.
 Fase M.M.G. and R.C.N. Abama. 2003. Financial environment and economic growth in selected Asian countries”. Journal of Asian Economics, 14:11–21.
 Glewwe, P., Maïga, E. and Zheng, H. 2014. The Contribution of Education to Economic Growth: A Review of the Evidence, with Special Attention and an Application to Sub-Saharan Africa. World Development, 59: 379–393.
 Gries T., Manfred K. and Meierrieks, D. (2009). “Linkages between Financial Deepening, Trade Openness, and Economic Development”: Causality Evidence from Sub-Saharan Africa. World Development, 37(12):1849–1860.
 Honohan, P. and Beck, T. 2007. Making Finance Work for Africa. The international bank for reconstruction and Development / The World Bank. ISBN- 10: 0-8213-6909-1.
 International Monetary Fund. 2011. International Financial Statistics.
 Jaliliani, H. and Kirkpatrick, C. 2002. Financial development and poverty reduction in development developing countries. International Journal of finance and Economics. Int. J. Fin. Econ. 7: 97–108.
 Iganiga, B. O. 2010. Evaluation of the Nigerian Financial Sector Reforms Using Behavioral Models, Journal of Economics, 1 (2): 65-75.
 Kar, M., Nazlıoğlu, S., Ağır, H. 2010. Financial development and economic growth nexus in the MENA countries: Bootstrap panel granger causality analysis, Economic Modelling, 28: 685–693.
 King, R. G. and Levine, R .1993b. Finance, entrepreneurship, and growth: Theory and evidence from five industrialized economies. Research in International Business Evidence, Journal of Monetary Economics, 32, 513-542.
 Law, S.H. and Singh, N. 2014.Does too much finance harm economic growth? Journal of Banking and Finance, 41: 36–44.
 Lemo T .2005. Regulatory Oversight and Stakeholder Protection. A paper presented at the BGL Mergers and Acquisitions Interactive Seminar held at Eko Hotels and Suites, Victoria Island, June 24.
 Liu, W. C, and Hsu, C. M, 2006. The role of financial development in economic growth: The experiences of Taiwan, Korea, and Japan. Journal of Asian Economics 17: 667–690.
 Lucas, R. E.1988. On the mechanics of economic development. Journal of Monetary Economics, 22(1): 3-42.
 Misati, R. N. and Nyamongo, E. M. 2011. Financial liberalization, financial fragility and economic growth in Sub-Saharan Africa. Journal of Financial Stability, 8 (3):150-160.
 McKinnon, R. I. 1973.Money and Capital in Economic Development’, Washington: The Brookings Institution.
 Menyah, K. Nazlioglu S., Wolde-Rufael, Y. 2013. Financial development, trade openness and economic growth in African Countries: New insights from a panel causality approach. Journal of Economic Modelling, 37: 386-394.
 Nauro F. Campos, Menelaos G. Karanasos Bin Tan (2011). “Two to tangle: Financial development, political instability and economic growth in Argentina” Journal of Banking & Finance 36 (2012) 290–304.
 Narayan, R. K. and Narayan, S.2013. International Review of Financial Analysis, 70–78.
 Nyamongoa, E. M, Misati, R. N., Kipyegon, L., Ndirangua, L 2012. Remittances, financial development and economic growth in Africa”. Journal of Economics and Business, 64:240-260.
 Patrick, H.T. 1966. Financial development and economic growth in underdeveloped Countries”, Economic Development and Cultural Change, 14(1), 174-189.
 Robinson, J. 1952. The generalization of the general theory, in The Rate of Interest and Other Essays, MacMillan, London.
 Shan, J. 2005. Does financial development ‘lead' economic growth? A vector auto-regression appraisal. Applied Economics, 37(12), 1353-1367.
 Zhang, J., Wang, L. and Wang, S. 2012. Financial development and economic growth: Recent evidence from China” Journal of Comparative Economics, 40 393–412.