Finance and Inclusive Human Development: Evidence from Africa

Brussels Economic Review, Forthcoming

African Governance and Development Institute Working Paper No. 15/061

32 Pages Posted: 5 Mar 2016

See all articles by Simplice Asongu

Simplice Asongu

African Governance and Development Institute

Jacinta Nwachukwu

University of Huddersfield - Business School

Date Written: December 2, 2015

Abstract

This study investigates direct and indirect linkages between financial development and inclusive human development in data panels for African countries using a battery of estimation techniques, notably: Two-Stage Least Squares, Fixed Effects, Generalized Method of Moments and Tobit regressions. The dependent variable is the inequality adjusted human development index. All dimensions of the Financial Development and Structure Database (FDSD) of the World Bank are considered. The main finding is that financial dynamics of depth, activity and size improve inclusive human development, whereas the inability of banks to transform mobilized deposits into credit for financial access negatively affects inclusive human development. Policy implications are discussed in the light of fighting surplus liquidity and providing information sharing offices (like public credit registries and private credit bureaus) that would reduce information asymmetry between lenders and borrowers.

Keywords: Banking; human development; Africa

JEL Classification: E00; G20; I00; O10

Suggested Citation

Asongu, Simplice and Nwachukwu, Jacinta C., Finance and Inclusive Human Development: Evidence from Africa (December 2, 2015). Brussels Economic Review, Forthcoming; African Governance and Development Institute Working Paper No. 15/061. Available at SSRN: https://ssrn.com/abstract=2741429

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

Jacinta C. Nwachukwu

University of Huddersfield - Business School ( email )

Queensgate
Huddersfield HD1 3DH
United Kingdom

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