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Financial development, external debt and economic growth: evidence from Ghana
Author(s):Bernardin Senadzaa#, Agbemavor Korsi Fiagbeb and Emmanuel Ashiedu Codjoec
bsenadza@ug.edu.gh
2024-08-01 05:45:03
43 Downloads 77 Views
Abstract
This paper analyses the effect of financial development and external debt on Ghana's economic growth. Low financial sector growth coupled with inability to find innovative ways of generating domestic revenue in developing countries has led to increasing reliance on external borrowing for development finance. Over the recent past, Ghana has resorted to the issuance of bonds and other non-concessional loans, leading to rising debt ratios. Using the Autoregressive-Distributed Lag technique on time series data from 1970 to 2015, we find that external debt has a negative effect on Ghana's economic growth. On the other hand, financial sector development has a positive effect on growth. We also find a one-way causality from financial development and external debt to economic growth.
Keywords
Economic Growth, Financial Development, External Debt, Debt Burden, Autoregressive-Distributed Lag, Ghana.
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