Financial deepening, economic growth ad development : Evidence from selected Sub-Saharan African countries

Abstract

Lack of or stagnant growth of output of any country is often caused by "shallow-finance". A shallow financial depth (FD) means that the range of financial assets for that country is narrow. It is a scenario that goes far in explaining why most SSA countries have low or negative per capita growth rates. This study identifies the range of financial assets that ca adequately approximate financial deepening, which simply means an increase in the supply of financial assets in the economy. FD is represented by two variables, the degree of financial intermediation/development (M2/Y) and the growth rate in per capita real money balance (GPRMB). Because of lack of date on other measures of financial assets in most SSA countries, broad money (M2) was used as numerator for both variables. Estimations depending on the two measures of FD and other explanatory variables of interest were done with an ordinary least squares (OLS) multiple regression procedure. Three modelled equations, with...