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- Title
DOES INFRASTRUCTURE ALTER THE NEXUS BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH? INSIGHTS FROM SUBSAHARAN AFRICA.
- Authors
ALABI, SALIHU OTUNBA; YUSUF, HAMMED AGBOOLA; SHITTU, WALIU OLAWALE; AFOLABI, LUQMAN OLANREWAJU; GOLD, KAFILAT LOLA
- Abstract
This research investigates the role of infrastructure in the nexus between financial development and economic growth in 20 SSA countries. Our study is among the few to have observed an asymmetric connection between financial development and growth, while also measuring the interactive role of infrastructure on growth in SSA, which is considered the most vulnerable region in the world. While employing the pooled mean group (PMG) estimation technique on the data (spanning 1985 - 2018) obtained through secondary sources, our empirical findings suggest a non-linear linkage between financial development and economic growth, such that the positive impact outweighs the negative one in both the shortrun and the long-run. The non-linear estimate, however, provides that financial development has a mixed impact on economic growth as it indicates a positive effect to a certain level after which it hurts growth. Moreover, a negative long-run coefficient is observed on infrastructure, wherein it reduces the growth rate of the SSA economy by an average of 0.27%. On the final note, the interaction effect of infrastructure and financial development reveal a positive linkage with economic growth, wherein infrastructure enhances the longrun positive effect of financial development on the growth of the SSA countries by 0.23%. These results have important policy implications on the economies of the West African countries considered, as the study reveals inefficiency of infrastructure investment in the region.
- Subjects
AFRICA; ECONOMIC expansion; ECONOMIC impact; INFRASTRUCTURE funds
- Publication
Journal of Academic Research in Economics, 2024, Vol 16, Issue 1, p205
- ISSN
2066-0855
- Publication type
Article