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Re-examination of the Effect of Financial Development on Poverty Reduction in Ghana
Author(s):Eric Justice Eduboaha* and Paul Owusu Takyib
ejeduboah@uew.edu.gh
2024-07-31 08:03:13
71 Downloads 162 Views
Abstract
The paper re-examines the effect of financial liberalization in Ghana’s effort to alleviating poverty. Specifically, it analyzes the relationship between financial sector development and poverty reduction using quarterly data from 1990:1 to 2019:4 for Ghana. We employ the Maximum Likelihood Estimation technique by means of Autoregressive Distributed Lag (ARDL) approach. We find that there is a unique cointegration and statistically significant negative relationship between financial sector development and poverty reduction. In particular, we find that higher levels of financial sector development significantly reduce poverty reduction in the Ghanaian economy. Also, our causality results show that there is a unidirectional causality between financial sector development and poverty reduction with the causality running from financial sector development to poverty reduction. From a policy perspective, efforts by the Government of Ghana through the Central Bank of Ghana to develop the financial sector are important to alleviate poverty in the Ghanaian economy.
Keywords
Financial sector development; poverty reduction; cointegration; Ghana
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