n African Finance Journal - Financial sector development and economic growth for African countries

Special issue 1
  • ISSN : 1605-9786



This paper attempts the key research question of whether differences in financial development are significantly associated with differences in economic growth for 13 African countries using panel data from 1984-2002. A base model first regressed real per capita growth on control variables. Thereafter, financial sector development variables are introduced progressively. The Hausman's specification test favors the fixed effect model. The most plausible model shows that financial sector development variables contribute greatly in explaining economic growth: high coefficients associated with financial development variables. Thus efforts of developing financial sector should be emphasized, particularly for the African economies, for greater economic growth.

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