Does financial sector development have an effect on economic growth? : A study of sub-saharan africa

University essay from Södertörns högskola/Nationalekonomi

Abstract: The role of the financial sector in helping an economy grow has been the subject of debate for a long time. Recently, however, consensus has been reached, through empirical evidence, showing the importance of financial sector development in achieving economic growth (ADB, 2009). Using the Global Financial Development Database (GFDD) model, the study done here will provide an analysis of financial sector development in Sub-Saharan Africa and its effect on economic growth, using data for 40 countries, in the years from 2000-2014. This analysis was done using a cross-sectional regression analysis of countries in Sub-Saharan Africa (SSA) with data provided from the World Bank. The regression shows significantly positive results between economic growth and firms using banks to finance investments, bank cost to income ratio and bank credit to bank deposits, while significantly negative results are shown in financial system deposits and stock market total value traded. However, seeing as financial sector development is diverse and dynamic, these measurements and the regression done here will not provide a comprehensive picture of the state of financial sector development in SSA.

  AT THIS PAGE YOU CAN DOWNLOAD THE WHOLE ESSAY. (follow the link to the next page)