Does financial development improve structural transformation in Africa? A long and short term analysis

Thierry Mamadou Asngar ()
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Thierry Mamadou Asngar: University of N’Djamena

SN Business & Economics, 2025, vol. 5, issue 7, 1-26

Abstract: Abstract This study analyzes the effect of financial development on structural transformation in Africa over the period 1990–2022. The sample is made up of 54 African countries. We conduct a study of the long and short term. Key indicators examined include manufacturing value added, M2 money supply and bank credit. Three estimation techniques are applied to obtain the basic results. The results indicate an overall significant positive effect of financial development on structural transformation. However, negative effects of money supply growth on manufacturing value added are obtained. The negative coefficients for the long-run variables suggest that delays in financial development slow down the process of structural transformation. Transmission channels (expenditure on transport infrastructure, presence of railroads and access to information and communication technologies) are employed. The results then show changes. We recommend that the authorities strengthen financial development and make finance more inclusive.

Keywords: Financial development; Structural transformation; Manufacturing value added; Africa (search for similar items in EconPapers)
JEL-codes: G24 L63 L72 L86 R51 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00839-2

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