Does Financial Liberalization, Spur Economic Growth and Poverty Reduction in Six Sub-Saharan African Countries; Panel Unit Root and Panel Vector Error Correction Tests

Muhammad Yusuf and Dr.Malarvizhi A.C.

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the linkage among financial liberalization, economic growth and poverty reduction in Sub-Saharan African countries (SSA). The study applies the recent panel Co-integration and vector error correction mechanism to address the heterogeneity and cross-border interdependence over the period of 1980 to 2010. The results reveal that economic growth is positively associated with poverty reduction and financial liberalization coefficients are positively related to economic growth. It implies that financial liberalization causes economic growth. However, the coefficients of financial liberalization are not significant in the poverty equation suggests that financial liberalization does not have direct impact on poverty reduction in the six Sub-Saharan African countries. This implies that the financial liberalization effects of poverty are upon contingent on the distributional changes introduced by the growth and the configuration of institutions and policies that supported the liberalization process and particularly, the existence or otherwise of good governance.

Keywords: Liberalization; poverty; economic growth; financial repression (search for similar items in EconPapers)
JEL-codes: G0 (search for similar items in EconPapers)
Date: 2014-02, Revised 2013-08
New Economics Papers: this item is included in nep-afr, nep-fdg, nep-gro and nep-pke
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https://mpra.ub.uni-muenchen.de/52419/1/MPRA_paper_52419.pdf revised version (application/pdf)

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