Published on June 2019 | Economics

Are Trade Openness and Institutional Quality Important for Financial Development?

This study examines the importance of trade openness and institutional quality for financial development in sub-Saharan Africa. The study covers 37 sub-Saharan African countries over the period 1986-2016. Using the system Generalized Method of Moments Technique, it finds that trade openness has a positive impact on financial development, while only democracy accountability and government stability contribute significantly to financial development. The study finds that institutional quality does not complement trade openness to exact positive impacts on financial development. There is a need for policies that will foster development of institutional quality in sub-Saharan Africa.