On the macroeconomic determinants of financial institutions development in sub-Saharan Africa

Olufemi Adewale Aluko () and Muazu Ibrahim ()
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Olufemi Adewale Aluko: University of Ilorin
Muazu Ibrahim: University for Development Studies

International Review of Economics, 2020, vol. 67, issue 1, No 6, 69-85

Abstract: Abstract This study investigates the macroeconomic determinants of financial institutions development in a panel of 32 countries in sub-Saharan Africa from 1985 to 2015. Using the two-step system generalized method of moments dynamic panel model estimation approach, the results reveal that trade openness, income, and government expenditure are positive determinants of financial institutions development while higher inflation inhibits improvement in financial institutions. The results suggest that financial institutions are better developed in countries with higher trade openness, income, and government expenditure and are less developed in high-inflation countries. The results are not robust to the dimensions of financial institutions development considered in this study. Policy implications are documented.

Keywords: Financial institutions development; Financial institutions depth; Financial institutions efficiency; Financial institutions access (search for similar items in EconPapers)
JEL-codes: F4 G2 O5 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s12232-019-00332-x

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