Financial Development and Economic Growth in Ghana: Is There a Causal Link?

Peter Quartey () and Frank Prah ()
Additional contact information
Frank Prah: University of Ghana

The African Finance Journal, 2008, vol. 10, issue 1, 28-54

Abstract: This study seeks to find out whether financial development in Ghana conforms to either the Supply-leading, demand-following or Patrick’s Stages of development hypotheses. A bivariate VAR model is estimated in four scenarios, after which Granger-causality Test, Impulse Response Function and Variance Decomposition analyses were conducted for each respective scenario of the VAR. Whereas there is some evidence in support of demand-following hypothesis, when growth of broad money to GDP ratio is used as a measure of financial development, there is no significant evidence to support either the supply-leading or demand-following hypotheses when growth in domestic credit to GDP ratio, private credit to GDP ratio, and private credit to domestic credit ratio are used as proxies for financial development. Also, in all the four scenarios, there is no statistical evidence to support Patrick’s stages of development hypothesis in Ghana.

JEL-codes: E41 E44 E51 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.journals.co.za/ej/ejour_finj.html (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:afj:journl:v:10:y:2008:i:1:p:28-54

Access Statistics for this article

More articles in The African Finance Journal from Africagrowth Institute Contact information at EDIRC.
Bibliographic data for series maintained by Kirk De Doncker ().