Financial Development and Economic Growth in Sub-Saharan Africa Revisited: Disentangling the Role of Banks and Stock Markets

Mayoro Diop (), Mamadou Moustapha Ka, Ababacar Sedikh Gueye and Babacar Sène ()
Additional contact information
Mayoro Diop: Ecole Supérieure d’Economie Appliquée (ESEA), Université Cheikh Anta Diop, Dakar Fann BP. 5084, Senegal
Mamadou Moustapha Ka: Ecole Supérieure d’Economie Appliquée (ESEA), Université Cheikh Anta Diop, Dakar Fann BP. 5084, Senegal
Ababacar Sedikh Gueye: Ecole Supérieure d’Economie Appliquée (ESEA), Université Cheikh Anta Diop, Dakar Fann BP. 5084, Senegal
Babacar Sène: Faculté des Sciences Economiques et de Gestion (FASEG), Université Cheikh Anta Diop, Dakar Fann BP. 5683, Senegal

IJFS, 2025, vol. 13, issue 2, 1-22

Abstract: The objective of this paper is to contribute to the analysis of the relationship between banks and stock markets in sub-Saharan African countries and their impacts on economic growth. While the literature on this issue is abundant, our article focuses on disentangling the effects of banks and stock markets on economic growth. Our approach is based on two indicators: the “activity–structure” variable, which measures the importance of stock markets in relation to banks, and the “activity–finance” variable, which takes into account the simultaneous development of banks and stock markets. Our empirical strategy is based on the estimation of a dynamic fixed effect model. The results indicate that the development of banks has a negative and significant impact, while the development of stock markets seems to have a positive influence on economic growth. It also shows that government authorities need to focus on developing stock markets at the expense of banks to promote economic growth.

Keywords: financial development; financial markets; dynamic fixed effect models; sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7072/13/2/92/pdf (application/pdf)
https://www.mdpi.com/2227-7072/13/2/92/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:13:y:2025:i:2:p:92-:d:1668074

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().