Economic Integration and Financial Development Effect on Selected SSA Countries' Economic Growth

Authors : Fuat Sekmen, Mahamane Lawali Atahirou Mahamane, Haşmet Gökırmak

Pages : 190-215

Doi:10.47097/piar.1678012

View : 51 | Download : 21

Publication Date : 2025-06-30

Article Type : Research Paper

Abstract :This study investigates the relationship between financial development (FD) and economic growth within the context of economic integration in five African countries over the period 1970–2018. Employing a VECMX(p,s) model, the analysis provides evidence of both long-term equilibrium relationships and short-term dynamics among the variables. The empirical findings reveal that in Cameroon, financial development has a positive cumulative impact on economic growth. In contrast, no significant effect of FD—whether through broad money or domestic credit—is observed in Benin and Niger. In Chad, FD (as proxied by broad money) exerts a negative influence, while domestic credit remains statistically insignificant. Nigeria shows a positive linkage between broad money and growth, yet no statistically significant effect from domestic credit is detected. Moreover, inter-country spillover effects are observed, suggesting a regional dimension to financial interactions. Overall, the estimated VECMX (3,0) model demonstrates satisfactory predictive performance. Policy implications emphasize the need for country-specific adjustments in fiscal and monetary frameworks to improve credit access, particularly for SMEs and cooperative entities. Regionally, the African Union should design integration strategies that are responsive to the heterogeneous financial structures and institutional realities across member states.
Keywords : VECMX, Finansal Kalkınma, Ekonomik Entegrasyon, Afrika Birliği.

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