Acta Universitatis Danubius. Œconomica, Vol 15, No 4 (2019)

Financial Globalization and Economic Growth in Sub-Saharan Africa: The Role of Institutional Quality

Tajudeen Egbetunde, Anthony Enisan Akinlo

Abstract


The paper examines the role of institutional quality in the effect of financial globalization on economic growth in sub-Saharan Africa (SSA). The study used a dynamic panel Generalised Method of Moment (GMM) test in estimating the data. The paper finds that financial globalization has a negative and significant impact on economic growth in SSA. The results further show that institutional quality (measured by government effectiveness) lessens the negative effect of financial globalization on economic growth in SSA. The paper concludes that institutional quality mitigates the negative effect of financial globalization on economic growth in SSA. Therefore, governments in this region should put in place appropriate mechanism that will stimulate government effectiveness in order to derive the benefits of financial globalization which in turn enhance economic growth.

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