The Role of Financial Development and Government Size in Moderating the Effect of Global Uncertainty on International Trade in Africa

Oliver E. Ogbonna and Mulatu F. Zerihun ()
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Mulatu F. Zerihun: Tshwane University of Technology, Pretoria, South Africa

The African Finance Journal, 2025, vol. 27, issue 1, 13-31

Abstract: This study explores how policy uncertainty affects exports and imports and how financial development and government size moderate the effect. Using the GMM method, the study analyses data from 38 African countries spanning 2010–2022. Key findings show that (i) world uncertainty reduces the exports and imports; (ii) the effect of internal uncertainty is more pronounced on exports, while external uncertainty has a greater impact on imports; (iii) financial development does not have the capacity to attenuate the negative effects of world uncertainty on international trade; and (iv) under the influence of world uncertainty, government size plays a countercyclical role.

Keywords: International Trade; Policy Uncertainty; Financial Development; Government Size; System GMM (search for similar items in EconPapers)
JEL-codes: C33 D81 F14 G21 H11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journl:v:27:y:2025:i:1:p:13-31

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