The Relationship Among Human Capital, Financial Development and Economic Growth: Panel VARX Evidence from ECOWAS Countries

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

Pages : 897-925

Doi:10.30784/epfad.1695318

View : 184 | Download : 242

Publication Date : 2025-09-30

Article Type : Research Paper

Abstract :This paper analyses the relationship among economic growth, financial development, and human capital for 14 ECOWAS countries from 1970 to 2021 years using panel VARX (Vector Auto–Regressive with eXogenous variable). Results suggested evidence of bidirectional causality between money supply and life expectancy at birth and unidirectional causality running from GDP to domestic credit, education, human capital to GDP, money supply to GDP, health-based human capital to domestic credit, and domestic credit to broad money. Overall, financial development, as measured by broad money, hurt economic growth, while when measured by domestic credit, it had a positive but statistically insignificant effect on growth. Human capital, while represented by education did have a positive impact on GDP, while the impact of human capital when represented by health on GDP was also positive but statistically insignificant. Also, health-based human capital interacted positively with financial development, irrespective of the proxy used, but education-based human capital had no statistically significant interaction with any financial development measures. Economic growth has a significant positive impact on financial development through domestic credit, but has a positive and insignificant impact on money supply and human capital.
Keywords : Ekonomik Büyüme, Finansal Gelişme, İnsan Sermayesi, ECOWAS, Panel VARX

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