What Really Drives Financial Sector Development in Ghana?

Isaac Kwesi Ofori and Camara Kwasi Obeng

Chapter Chapter 2 in Financial Sector Development in Ghana, 2023, pp 13-53 from Palgrave Macmillan

Abstract: Abstract The chapter addresses two voids in the financial development scholarship on Ghana. First is the preferential selection of covariates deemed influential for financial development, and second, the use of traditional methods that lack regularisation powers for predicting financial development. To fill these gaps, we employ machine learning techniques to achieve two objectives—first, for identifying variables key for driving financial development in Ghana, and second, for presenting a model best for predicting financial development. To this end, we run three machine learning regularisation models namely, the Standard lasso, the Adaptive lasso and the minimum Schwarz Bayesian Information Criterion lasso, based on a dataset containing 81 potential predictors of financial development. We find that, for both regularisation and prediction objectives, the Adaptive lasso is the best. The evidence suggests that covariates such as economic globalisation, internet access and institutional quality matter for Ghana’s financial sector development. Policy recommendations are provided in the end.

Keywords: Cross-validation; Adaptive lasso; Financial development; Ghana; Lasso; Model selection; Regularisation; Standard lasso (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:pal:pmschp:978-3-031-09345-6_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9783031093456

DOI: 10.1007/978-3-031-09345-6_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().