Financial Development and Economic Growth in Ghana: Does the Measure of Financial Development Matter

Abstract

The aim of this paper is to investigate the long-run growth effects of financial development in Ghana. We find that the growth effect of financial development is sensitive to the choice of proxy. Both the credit to the private sector as ratios to GDP and total domestic credit are conducive for growth, while broad money stock to GDP ratio is not growth-inducing. The indexes created from principal component analysis confirmed the sensitivity of the effect to the choice of proxy. The findings here suggest that whether financial development is good or bad for growth depends on the indicator used to proxy for financial development.

Published in

Review of Development Finance
2013, volume: 3, number: 4, pages: 192-203

SLU Authors

• Marbuah, George

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Tei Mensah, Justice

  • Department of Economics, Swedish University of Agricultural Sciences
    

Global goals (SDG)

SDG8 Decent work and economic growth

UKÄ Subject classification

Economics

Publication identifier

• DOI: https://doi.org/10.1016/j.rdf.2013.11.001

Permanent link to this page (URI)

https://res.slu.se/id/publ/50788