To read the full version of this content please select one of the options below:

Financial inclusion and financial sector development in Sub-Saharan Africa: a panel VAR approach

Ebenezer Bugri Anarfo (Department of Finance and Accounting, Ghana Institute of Management and Public Administration, Achimota, Ghana)
Joshua Yindenaba Abor (Department of Finance, University of Ghana, Accra, Ghana)
Kofi Achampong Osei (Department of Finance, University of Ghana, Accra, Ghana)
Agyapomaa Gyeke-Dako (Department of Finance, University of Ghana, Accra, Ghana)

International Journal of Managerial Finance

ISSN: 1743-9132

Article publication date: 12 April 2019

Issue publication date: 31 July 2019

Abstract

Purpose

The purpose of this paper is to investigate the dynamic link between financial inclusion and financial sector development (FSD) in Sub-Saharan Africa.

Design/methodology/approach

This paper employs a panel vector autoregressive framework to examine the dynamic link between financial inclusion and FSD in Sub-Saharan Africa.

Findings

The findings indicate that there is a reverse causality between FSD and financial inclusion in both the Sub-Saharan Africa countries sample and the full sample. It is evident that financial inclusion is a driver of FSD and vice versa.

Practical implications

The practical implication of this study is that financial inclusion should not only be pursued as a policy objective but it could also be an outcome variable of FSD and vice versa. This implies that African economies and governments in their effort to enhance financial inclusion, FSD can serve as a policy tool. This means that policies aimed at promoting financial inclusion will not impede FSD because the two are complementary. This suggests that we can achieve financial inclusion without sacrificing FSD and vice versa.

Originality/value

This paper provides first empirical evidence of the link between financial inclusion and FSD from the Sub-Saharan Africa perspective using data sourced from World Development Indicators spanning from 1990 to 2014 for 48 Sub-Saharan African economies and 217 economies in the world for the full sample.

Keywords

Citation

Anarfo, E.B., Abor, J.Y., Osei, K.A. and Gyeke-Dako, A. (2019), "Financial inclusion and financial sector development in Sub-Saharan Africa: a panel VAR approach", International Journal of Managerial Finance, Vol. 15 No. 4, pp. 444-463. https://doi.org/10.1108/IJMF-07-2018-0205

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited