Title: Demand-following or supply-leading: an examination of the finance-growth nexus in selected sub-Sahara African countries

Authors: Mohamed Jalloh

Addresses: Macroeconomic Policy Department, Economic Policy Analysis Unit (EPAU), ECOWAS Commission, River Plaza, Central Area, Abuja, Nigeria

Abstract: This study assesses the extent to which economic growth has been influenced by financial sector development in sub-Sahara Africa. In order to empirically determine the flow of causation between financial sector development and economic growth, country-specific time series data on key financial development indicators was utilised to implement various tests for causality. The results from causality tests reveal that, whilst causation flows purely from growth to financial development for Benin, Congo, Nigeria and Zambia, the reverse holds for Chad, Cote d'Ivoire, Mauritania and Kenya. The study also reveals bilateral causation between financial sector development and growth for countries like Burkina Faso, Cameroon, Malawi, Mali, Sierra Leone and South Africa. It however fails to establish significant causal effects between financial development and growth for Ghana, The Gambia, Senegal, Swaziland and Uganda.

Keywords: financial sector; economic growth; causality; bilateral causation; sub-Sahara Africa; SSA; financial development.

DOI: 10.1504/AAJFA.2015.070285

Afro-Asian Journal of Finance and Accounting, 2015 Vol.5 No.3, pp.193 - 215

Received: 09 May 2014
Accepted: 11 Feb 2015
Published online: 01 Jul 2015 *

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