Trade openness and financial development in sub‐Saharan Africa: The role of institutional structures

2021 ◽  
Author(s):  
Mac Junior Abeka ◽  
John Gartchie Gatsi ◽  
Michael Owusu Appiah ◽  
Otuo Serebour Agyemang
Keyword(s):  
Financial Development ◽  
Trade Openness ◽  
Sub Saharan Africa ◽  
Institutional Structures ◽  
Sub Saharan

Savings-investment-financial development trilogy: evidence from SSA

2017 ◽  
Vol 9 (1) ◽  
pp. 20-33
Author(s):  
Ibrahim D. Raheem ◽  
Mutiu Abimbola Oyinlola
Keyword(s):  
Financial Development ◽  
Quantitative Measure ◽  
Financial Sector ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Qualitative Nature ◽  
Sub Saharan ◽  
Generalised Method Of Moments ◽  
Qualitative Measure

Purpose The study seeks to examine the role of financial development (FD) in the Feldstein–Horioka (FH) puzzle. The novelty of this study is based on the fact that the measures of FD are expanded to account for the qualitative nature of the financial sector (“better finance”). Design/methodology/approach The study used annual dataset for 37 countries in sub-Saharan Africa (SSA) for the period 1999 through 2010 and relied on the system generalised method of moments (GMM) technique, which takes accounts of endogeneity-related issues. Findings The estimated FH coefficients ranged between 0.419 and 0.720. The qualitative measures of FD have higher FH coefficient relative to the traditional or quantitative measure of FD (“more finance”). Hence, improvement in both the quantity and quality of the financial sector might be helpful in the mobilization, distribution and utilization of savings for investment purposes within these economies. The high FH coefficients obtained suggest that the FH puzzle does not hold in the SSA region. Practical implications Policymakers should formulate and design policies that would seek to ensure the development of the financial sector both in terms of quantity and quality. While taking this into consideration, special attention should be devoted to the qualitative measure of finance. Originality/value The study extends the work of Adeniyi and Egwaikhide (2013) by providing different and, possibly better proxies for FD to capture the efficiency and the qualitative nature of the financial system. This crux of the study serves as the value addition to the literature, as no other study the authors are aware of, has considered the importance of “better finance” indicators in the saving – investment nexus investigation.

scholarly journals Remittances and health outcomes in Sub-Saharan African countries: Understanding the role of financial development and institutional quality

2021 ◽  
Vol 66 (229) ◽  
pp. 119-144
Author(s):  
Uweis Bare ◽  
Yasmin Bani ◽  
Normaz Ismail ◽  
Anitha Rosland
Keyword(s):  
Health Outcomes ◽  
Financial Development ◽  
Institutional Quality ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Dynamic Panel ◽  
Sub Saharan ◽  
Ssa Countries

Sub-Saharan Africa (SSA) is one of the highest recipients of remittances; however, this is inconsistent with the region?s growth and the state of its weak healthcare systems. This paper therefore analyses the effect of remittances on health outcomes for 39 selected SSA countries over the period 1996 to 2016. It considers the channels through which remittances affect health outcomes, including financial development and institutional quality. Using dynamic panel estimation, we find that remittances sustain health outcomes, while both financial development and institutional quality complement remittances in this respect. SSA countries should therefore continue to improve their financial sectors and develop the quality of institutions to an adequate level. Achieving sound financial systems and institutions would both allow and attract a substantial amount of remittances, benefitting human capital and health outcomes and alleviating poverty.

scholarly journals FINANCIAL DEVELOPMENT IN DEVELOPING COUNTRIES

2020 ◽  
Vol 20 (03) ◽  
pp. 2050016
Author(s):  
OBINNA FRANKLIN EZEIBEKWE
Keyword(s):  
Developing Countries ◽  
South Asia ◽  
Financial Development ◽  
Trade Openness ◽  
National Income ◽  
Political Stability ◽  
Policy Implications ◽  
Sub Saharan Africa ◽  
Marginal Effect ◽  
Sub Saharan

What are the economic, political, institutional, socio-cultural, and geographical determinants of financial development in developing countries? This paper uses the two-way fixed effects (with clustered standard errors) and annual panel data from 1980 to 2018 for 69 developing countries in sub-Saharan Africa, Middle East and North Africa, East and South Asia, Latin America, and the Caribbean to address this question. The principal component analysis is employed to construct a financial development index based on three financial development indicators. This study builds on the previous studies by introducing new potential determinants of financial development such as the perception of corruption, and by exploring important quadratic and interaction effects. The results show that national income, trade openness, indices of political stability and Polity2 (a democracy score), perception of corruption, the predominant religion in the countries, and geographical factors such as territorial access to the sea explain the differences in the levels of financial development across countries and regions. A rise in national income leads to a higher level of financial development and countries with a high perceived level of corruption have a lower level of financial development. There is strong evidence of threshold effects as trade openness has a diminishing marginal effect on financial development while the auxiliary growth regressions show that financial development has an increasing marginal effect on national income. Of the five regions studied, East and South Asia and sub-Saharan Africa have the highest and lowest levels of financial development, respectively. Also, fuel-exporting countries, least developed countries, and landlocked countries tend to have lower levels of financial development. These results have relevant policy implications for developing countries in their continued efforts to achieve better financial development and ultimately, sustainable economic development.

scholarly journals The Role of Institutions in the Finance-Inequality Nexus in Sub-Saharan Africa

2017 ◽  
Vol 137 (1-2) ◽  
pp. 173-192
Author(s):  
Ngozi Adeleye ◽  
Evans Osabuohien ◽  
Ebenezer Bowale
Keyword(s):  
Income Inequality ◽  
Financial Development ◽  
Sub Saharan Africa ◽  
Jel Codes ◽  
Domestic Credit ◽  
Sub Saharan ◽  
Generalised Method Of Moments ◽  
Control Of Corruption ◽  
Ssa Countries

This study contributes to the literature on income inequality by providing evidence that financial development not only impacts income distribution, but the effects can improve when there is a strong institutional framework. Using the system-generalised method of moments (sys-GMM) technique on a sample of 42 Sub-Saharan African (SSA) countries from 1996 to 2015, our major findings are summarised as follows: (1) inequality is persistent in the region (2) financial development does not significantly reduce income inequality; and (3) the control of corruption and its interaction with domestic credit exhibit an inverted-U relation with income inequality. Thus, policies that will reduce income inequality require that corruption be controlled given increase in domestic credit. JEL Codes: F36; G21; O15

scholarly journals Improving ICT and renewable energy for environmental sustainability in sub-Saharan Africa

2020 ◽  
Vol 2 (3) ◽  
pp. 82-90
Author(s):  
Kabiru Maji Ibrahim ◽  
Salisu Ibrahim Waziri
Keyword(s):  
Renewable Energy ◽  
Co2 Emissions ◽  
Environmental Sustainability ◽  
Energy Use ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Sub Saharan Africa ◽  
Information And Communication ◽  
Sub Saharan

The study investigates the role of information and communication technology (ICT) and renewable energy on environmental sustainability in sub-Saharan Africa. The system generalized method of moments (GMM) was employed to estimate data of 45 sub-Saharan countries that cover the 2008 -2016 period. Result reveals that increasing ICT penetration and renewable energy use reduce CO2 emissions and improves environmental sustainability. Economic growth and population growth also mitigate CO2 emissions while education and trade openness have a neutral impact. These findings imply that increasing penetration of ICT facilities and renewable energy in the region will promote inclusive environmental sustainability. The interactive estimation of ICT variables was further considered to determine net effects and the ICT threshold that is relevant for policy implication.

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