• The Role of Financial Development in Ghana’s Economic Growth Process

    Author(s):

     Eric J. Eduboah


    ejeduboah@uew.edu.gh
    2024-07-31 07:55:10

    75 Downloads 178 Views

    Abstract

    The study sought to revisit the nexus between financial sector development, by using the Principal Component Analysis (PCA) was disintegrated into banking sector development index (BSDI), stock market development index (SMDI), bond market development index (BMDI and economic growth using quarterly data from 1990:1 to 2015:4 for Ghana, applying the Maximum Likelihood Estimation technique and by employing the Autoregressive Distributed Lag (ARDL) approach and the Granger causality test. The study found a unique cointegration and statistically significant positive relationship between financial sector development and economic growth in the long run and short run for Ghana. The causality result revealed a unidirectional causality between financial sector development and economic growth running from financial sector development to economic growth. The study, therefore, recommends that the Government of Ghana through the Central Bank of Ghana needs to maintain a continuous effort in developing the financial sector. This will in turn spur financial sector development and eventually economic growth in Ghana.

    Keywords
    Financial sector development; economic growth; Ghana; Principal Component Analysis (PCA).

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