Premium
Investigating the causality between financial inclusion, financial development and sustainable development in Sub‐Saharan Africa economies: The mediating role of foreign direct investment
Author(s) -
Odugbesan Jamiu Adetola,
Ike George,
Olowu Gbolahan,
Adeleye Bosede Ngozi
Publication year - 2022
Publication title -
journal of public affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 20
eISSN - 1479-1854
pISSN - 1472-3891
DOI - 10.1002/pa.2569
Subject(s) - foreign direct investment , economics , cointegration , causality (physics) , financial sector development , granger causality , economic rent , financial inclusion , panel data , monetary economics , financial market , sustainable development , macroeconomics , finance , financial sector , financial services , econometrics , market economy , physics , quantum mechanics , political science , law
In developing economies, the role of the financial sector and foreign capital in the stimulation of sustainable production practices has not been very clear cut. In a bid to obtain a much clearer empirical perspective, the present study investigates the causal relationship between financial development, financial inclusion, foreign direct investment (FDI) and sustainable development in a panel of 33 Sub‐Saharan African (SSA) economies within the 2004–2018 study periods. Panel cointegration tests uncover the presence of a long‐run relationship among the variables in the model. Prior to determining the direction of causality, panel estimation procedures show the magnitude and signs of the long run coefficients. Panel Granger causality tests uncover bidirectional causality between financial inclusion and FDI as well as between financial development and FDI. Also uncovered is unidirectional causality from FDI towards sustainable development and resource rents. This study suggests that the policymakers in SSA should optimize the level of financial development which requires a vigorous improvement so as to ensure higher potential benefits for the sustainability of SSA region through financial sector.