The Influence of Financial Sector Development on Economic Growth in West Africa

Author(s)

Sylvester Onyeoma , Ekane Raphael Ogagaoghene ,

Download Full PDF Pages: 01-14 | Views: 22 | Downloads: 8 | DOI: 10.5281/zenodo.14930978

Volume 14 - February 2025 (02)

Abstract

This study examines the influence of financial sector development on economic growth in West Africa using panel data covering the period between 1992 and 2023. The techniques employed are Generalized Method of Moments and Fully Modified ordinary least squares methods. The panel unit root test results show that all variables are not stationary at levels but became stationary at first difference i.e. I(1) variables. The Co-integration test indicated the existence of long-run relationship between financial development variables and economic growth. The results show that there is significant relationship between financial sector development variables and economic growth in West Africa. Specifically, there is positive and significant relationship between interest rate, market capitalization   ,  ,     money market instruments and creditor to the private sector with economic growth. Based on these findings, it was recommended that    governments of various West African countries should energize their capital markets and address the shortage of investment assets through effective policy measures that enhance the performance of stock markets and to restore confidence of the investors. Interest rate regulation and financial deepening measures should be monitored by the concerned authorities in West Africa to accelerate the economic growth of the sub-continent of West Africa

Keywords

Capitalization, Capital market, Interest Rate, Money Supply, Financial Deepening

JEL Codes: C32, C51, E27, H81

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