Effects of foreign capital inflows on human development in Ghana and the mediating role of institutional quality
- Authors: Dadzie, Sylvester Kwesi
- Date: 2024-04
- Subjects: Capital movements -- Ghana , Economic development -- Ghana , Structural equation modeling -- Case studies
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10948/64929 , vital:73987
- Description: The issue of financing for human development has been crucial for governments and stakeholders. The financing mechanisms for human development have been broadly categorised into domestic and foreign. The foreign capital inflows are to complement domestic resources for development. However, despite the heterogeneity of past studies, several studies have proved that with adequate institutional quality, an inflow of finance can positively impact human development. This study sought to examine the effect of foreign capital inflows on human development and the role of institutional quality in Ghana using partial least square structural equation modelling (PLS-SEM) on selected quartered secondary data from 1996 to 2020, primarily incorporating World Development Indicators (WDI) and World Governance Indicators (WGI). It reveals firstly that foreign capital inflows have significant positive influence on institutional quality in Ghana; secondly, institutional quality has insignificant positive effects on human development; thirdly, the direct effects of foreign capital inflows on human development are negative and insignificant. Finally, the effects of foreign capital inflows on human development are not mediated by institutional quality despite the positive effects of institutional quality. The study concludes that institutional quality does not mediate between the effects of foreign capital inflows and human development in Ghana. However, this study recommends that the government design and implement appropriate policies to create an enabling environment to strengthen institutions and regulations while attracting foreign capital as a supplementary source of domestic investment to enhance human development. , Thesis (MPhil) -- Faculty of Business and Economic Sciences, School of Economics, Development and Tourism, 2024
- Full Text:
- Date Issued: 2024-04
- Authors: Dadzie, Sylvester Kwesi
- Date: 2024-04
- Subjects: Capital movements -- Ghana , Economic development -- Ghana , Structural equation modeling -- Case studies
- Language: English
- Type: Master's theses , text
- Identifier: http://hdl.handle.net/10948/64929 , vital:73987
- Description: The issue of financing for human development has been crucial for governments and stakeholders. The financing mechanisms for human development have been broadly categorised into domestic and foreign. The foreign capital inflows are to complement domestic resources for development. However, despite the heterogeneity of past studies, several studies have proved that with adequate institutional quality, an inflow of finance can positively impact human development. This study sought to examine the effect of foreign capital inflows on human development and the role of institutional quality in Ghana using partial least square structural equation modelling (PLS-SEM) on selected quartered secondary data from 1996 to 2020, primarily incorporating World Development Indicators (WDI) and World Governance Indicators (WGI). It reveals firstly that foreign capital inflows have significant positive influence on institutional quality in Ghana; secondly, institutional quality has insignificant positive effects on human development; thirdly, the direct effects of foreign capital inflows on human development are negative and insignificant. Finally, the effects of foreign capital inflows on human development are not mediated by institutional quality despite the positive effects of institutional quality. The study concludes that institutional quality does not mediate between the effects of foreign capital inflows and human development in Ghana. However, this study recommends that the government design and implement appropriate policies to create an enabling environment to strengthen institutions and regulations while attracting foreign capital as a supplementary source of domestic investment to enhance human development. , Thesis (MPhil) -- Faculty of Business and Economic Sciences, School of Economics, Development and Tourism, 2024
- Full Text:
- Date Issued: 2024-04
Financial inclusion and economic growth in Ghana
- Authors: Anane, Alexander Kwabena
- Date: 2019
- Subjects: Economic development -- Ghana
- Language: English
- Type: Thesis , Masters , MPhil
- Identifier: http://hdl.handle.net/10948/40210 , vital:35990
- Description: The relationship between financial inclusion and the growth of the economy is a topic of debate in the existing literature. Yet globally and at individual country level, policy makers have accepted financial inclusion as a developmental agenda. This study, therefore, empirically investigates the relationship between financial inclusion and economic growth in Ghana using quarterly time series data from 2005 to 2016. Employing the commonly used indicators, the ARDL bounds test with cointergration was applied to examine the short and the long run relationship between the variables. Furthermore, the Granger causality approach was also used to establish the direction between financial inclusion and economic growth in Ghana. The result of the findings confirmed mixed results and no clear cut relationship between the direction of causality between the indicators of financial inclusion and economic growth. The study concluded that whether financial inclusion positively or negatively impact economic growth rests on the indicators employed. The study therefore cautions in the choice of financial indicators as policy tools in designing and executing economic growth and development policies in Ghana.
- Full Text:
- Date Issued: 2019
- Authors: Anane, Alexander Kwabena
- Date: 2019
- Subjects: Economic development -- Ghana
- Language: English
- Type: Thesis , Masters , MPhil
- Identifier: http://hdl.handle.net/10948/40210 , vital:35990
- Description: The relationship between financial inclusion and the growth of the economy is a topic of debate in the existing literature. Yet globally and at individual country level, policy makers have accepted financial inclusion as a developmental agenda. This study, therefore, empirically investigates the relationship between financial inclusion and economic growth in Ghana using quarterly time series data from 2005 to 2016. Employing the commonly used indicators, the ARDL bounds test with cointergration was applied to examine the short and the long run relationship between the variables. Furthermore, the Granger causality approach was also used to establish the direction between financial inclusion and economic growth in Ghana. The result of the findings confirmed mixed results and no clear cut relationship between the direction of causality between the indicators of financial inclusion and economic growth. The study concluded that whether financial inclusion positively or negatively impact economic growth rests on the indicators employed. The study therefore cautions in the choice of financial indicators as policy tools in designing and executing economic growth and development policies in Ghana.
- Full Text:
- Date Issued: 2019
The impact of financial developments on economic growth in Ghana: evidence from the manufacturing industries
- Authors: Brafi, Paul Osei
- Date: 2019
- Subjects: Economic development -- Ghana , Finance -- Ghana Manufactures -- Finance -- Ghana
- Language: English
- Type: Thesis , Doctoral , DCom
- Identifier: http://hdl.handle.net/10948/37184 , vital:34135
- Description: This study provides an analysis of financial and growth dynamics with a view to assess the impact of financial development on economic growth in Ghana. The study also examines the extent to which financial developments in Ghana are affecting capital accumulation and industrial sector growth. The analysis was performed by examining the financial development indicators and economic growth data for Ghana over the period from 1965 to 2016. The study was motivated by the theoretical indications that improvements in financial intermediation within the economy can induce growth of the real sector and thus lead to economic growth. There have been notable structural and financial sector reforms in Ghana since the early and late 1980s. The indications in the financial sector portray improvement in the measures of financial development in the post-reform era as compared to the years before. The findings of the study complement existing research findings and information on finance-growth association as well as the influence that finance has on the sources of growth. The study adopted real per capita gross domestic product (GDP) as a measure of economic growth. In addition, three real sector indicators serving as the sources of growth, included; capital accumulation, industrial value-added and manufacturing value added. The analysis also adopts four financial indicators, expressed as percentage shares of GDP, namely; domestic credit to private sector, total domestic credit provided by financial sector, broad money supply and financial sector deposits—as measures of financial development. The analysis of the impact of the financial development on capital accumulation, industrial output growth, manufacturing productivity and economic growth were estimated using the linear regression estimation techniques within the GMM estimation approach. The study, additionally, examined the short-run and long-run impacts of financial development on economic growth indicators by employing the Vector Autoregressive Regression (VAR) within the Autoregressive Distributed Lag (ARDL) approach. The study further assesses the direction of causality between financial development and economic growth indicators using the cointegration and Engle-Granger causality testing approach within VAR models. The Bayesian Vector Auto Regression (BVAR) models were applied to examine the drivers of economic growth and to assess the sensitivity of economic growth to financial development and macro-economic shocks. This assessment was carried out to examine the maximising behaviour of financial development and to find out if there exists threshold point beyond which finance adversely affects economic growth in Ghana. The results showed that credit to private sector shows a strong positive persistence in promoting economic growth in Ghana. The results show that financial development dynamics in Ghana positively affect long run economic growth and further indicate that the rate of impact was relatively higher in the post reform period of 1984 to 2016. The study further found a bi-directional causal association between financial development and economic growth. Regarding the sources of growth, the study found that financial development strongly contributes positively to capital accumulation in the long-term, however, the findings further suggested that, to some extent, the growing size of finance dampens capital formation and economic growth. This suggested the existence of inefficiencies in the expanding size of total credit offered by the financial system in Ghana. The study further found a long-run positive association between financial development and industrial productivity (except for manufacturing) growth in Ghana, with industry growth substantially determined by private credit. The results of the assessment on the sensitivity of economic growth to shocks in financial development indicators show that Ghana ‘s economic growth is, to a larger extent, influenced by domestic credit provided to the private sector. Also, the results showed that economic growth has been highly responsive to macro-economic shocks such as government expenditure and industrial sector growth although industrial growth seems to show a strong negative persistence on Ghana ‘s economy. The results from the analysis of finance and economic growth shows that existence of different optimal growth maximising points domestic credit, broad money, financial sector deposits and the overall financial development ratios as depicted by the various inverted U-shaped relationship between the financial development indicators and economic growth. The optimal size or maximising positions or thresholds for private credit and total credit were found to be at approximately 20.0 per cent and 28.0 per cent of GDP, respectively. On the other hand, the optimal size or minimum positions or thresholds for broad money supply and total financial sector deposits were found to be at approximately 19.0 per cent and 10.0 per cent of GDP, respectively. With regards to broad money supply-to-GDP and financial sector deposit-to-GDP ratios, the respective averages of 23.19 per cent and 13.77 per cent for the period 1965-2015 are higher than the minimum required thresholds of 19.00 per cent and 10.00 per cent, respectively. The findings show that financial developments have a strong positive association with economic growth, but the results also give the indication that although financial development can enhance growth and inefficiencies in the financial system can equally dampen growth at some levels. overall, the study found that financial reforms have positively contributed to economic growth in Ghana and the impacts of financial development on economic growth in Ghana have been higher in the post-reform era. The effect of financial reforms on capital accumulation was not significant although the study established that the impact of structural reforms was strong and adversely affected capital accumulation in Ghana. With regards to the industrial productivity growth, the study found a positive association between financial development and industry growth in Ghana. It was, however, observed that financial reforms have fails to significantly affect growth of industrial productivity and the impact of financial development on industry sector growth in Ghana are low but the sector experienced relatively higher growth in the pre-reform era.
- Full Text:
- Date Issued: 2019
- Authors: Brafi, Paul Osei
- Date: 2019
- Subjects: Economic development -- Ghana , Finance -- Ghana Manufactures -- Finance -- Ghana
- Language: English
- Type: Thesis , Doctoral , DCom
- Identifier: http://hdl.handle.net/10948/37184 , vital:34135
- Description: This study provides an analysis of financial and growth dynamics with a view to assess the impact of financial development on economic growth in Ghana. The study also examines the extent to which financial developments in Ghana are affecting capital accumulation and industrial sector growth. The analysis was performed by examining the financial development indicators and economic growth data for Ghana over the period from 1965 to 2016. The study was motivated by the theoretical indications that improvements in financial intermediation within the economy can induce growth of the real sector and thus lead to economic growth. There have been notable structural and financial sector reforms in Ghana since the early and late 1980s. The indications in the financial sector portray improvement in the measures of financial development in the post-reform era as compared to the years before. The findings of the study complement existing research findings and information on finance-growth association as well as the influence that finance has on the sources of growth. The study adopted real per capita gross domestic product (GDP) as a measure of economic growth. In addition, three real sector indicators serving as the sources of growth, included; capital accumulation, industrial value-added and manufacturing value added. The analysis also adopts four financial indicators, expressed as percentage shares of GDP, namely; domestic credit to private sector, total domestic credit provided by financial sector, broad money supply and financial sector deposits—as measures of financial development. The analysis of the impact of the financial development on capital accumulation, industrial output growth, manufacturing productivity and economic growth were estimated using the linear regression estimation techniques within the GMM estimation approach. The study, additionally, examined the short-run and long-run impacts of financial development on economic growth indicators by employing the Vector Autoregressive Regression (VAR) within the Autoregressive Distributed Lag (ARDL) approach. The study further assesses the direction of causality between financial development and economic growth indicators using the cointegration and Engle-Granger causality testing approach within VAR models. The Bayesian Vector Auto Regression (BVAR) models were applied to examine the drivers of economic growth and to assess the sensitivity of economic growth to financial development and macro-economic shocks. This assessment was carried out to examine the maximising behaviour of financial development and to find out if there exists threshold point beyond which finance adversely affects economic growth in Ghana. The results showed that credit to private sector shows a strong positive persistence in promoting economic growth in Ghana. The results show that financial development dynamics in Ghana positively affect long run economic growth and further indicate that the rate of impact was relatively higher in the post reform period of 1984 to 2016. The study further found a bi-directional causal association between financial development and economic growth. Regarding the sources of growth, the study found that financial development strongly contributes positively to capital accumulation in the long-term, however, the findings further suggested that, to some extent, the growing size of finance dampens capital formation and economic growth. This suggested the existence of inefficiencies in the expanding size of total credit offered by the financial system in Ghana. The study further found a long-run positive association between financial development and industrial productivity (except for manufacturing) growth in Ghana, with industry growth substantially determined by private credit. The results of the assessment on the sensitivity of economic growth to shocks in financial development indicators show that Ghana ‘s economic growth is, to a larger extent, influenced by domestic credit provided to the private sector. Also, the results showed that economic growth has been highly responsive to macro-economic shocks such as government expenditure and industrial sector growth although industrial growth seems to show a strong negative persistence on Ghana ‘s economy. The results from the analysis of finance and economic growth shows that existence of different optimal growth maximising points domestic credit, broad money, financial sector deposits and the overall financial development ratios as depicted by the various inverted U-shaped relationship between the financial development indicators and economic growth. The optimal size or maximising positions or thresholds for private credit and total credit were found to be at approximately 20.0 per cent and 28.0 per cent of GDP, respectively. On the other hand, the optimal size or minimum positions or thresholds for broad money supply and total financial sector deposits were found to be at approximately 19.0 per cent and 10.0 per cent of GDP, respectively. With regards to broad money supply-to-GDP and financial sector deposit-to-GDP ratios, the respective averages of 23.19 per cent and 13.77 per cent for the period 1965-2015 are higher than the minimum required thresholds of 19.00 per cent and 10.00 per cent, respectively. The findings show that financial developments have a strong positive association with economic growth, but the results also give the indication that although financial development can enhance growth and inefficiencies in the financial system can equally dampen growth at some levels. overall, the study found that financial reforms have positively contributed to economic growth in Ghana and the impacts of financial development on economic growth in Ghana have been higher in the post-reform era. The effect of financial reforms on capital accumulation was not significant although the study established that the impact of structural reforms was strong and adversely affected capital accumulation in Ghana. With regards to the industrial productivity growth, the study found a positive association between financial development and industry growth in Ghana. It was, however, observed that financial reforms have fails to significantly affect growth of industrial productivity and the impact of financial development on industry sector growth in Ghana are low but the sector experienced relatively higher growth in the pre-reform era.
- Full Text:
- Date Issued: 2019
Exchange rates behaviour in Ghana and Nigeria: is there a misalignment?
- Authors: Mapenda, Rufaro
- Date: 2011 , 2011-11-09
- Subjects: Foreign exchange rates -- Ghana , Foreign exchange rates -- Nigeria , Economic development -- Ghana , Economic development -- Nigeria , Foreign exchange administration -- Ghana , Foreign exchange administration -- Nigeria , International relations
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:976 , http://hdl.handle.net/10962/d1002710 , Foreign exchange rates -- Ghana , Foreign exchange rates -- Nigeria , Economic development -- Ghana , Economic development -- Nigeria , Foreign exchange administration -- Ghana , Foreign exchange administration -- Nigeria , International relations
- Description: Exchange rates are believed to be one of the major driving forces behind sustainable macroeconomic growth and it is therefore important to ensure that they are at an appropriate level. Exchange rate misalignment is a situation where the actual exchange rate differs significantly from its equilibrium value, resulting in either an overvalued or an undervalued currency. The problem with an undervalued currency is that it will increase the domestic price of tradable goods whereas an overvalued currency will cause a fall in the domestic prices of the tradable goods. Persistent exchange rate misalignment is thus expected to result in severe macroeconomic instability. The aim of this study is to estimate the equilibrium real exchange rate for both Ghana and Nigeria. After so doing, the equilibrium real exchange rate is compared to the actual real exchange rate, in order to assess the extent of real exchange rate misalignment in both countries, if any such exists. In order test the applicability of the equilibrium exchange rate models, the study draws from the simple monetary model as well as the Edwards (1989) and Montiel (1999) models. These models postulate that the variables which determine the real exchange rate are the terms of trade, trade restrictions, domestic interest rates, foreign aid inflow, income, money supply, world inflation, government consumption expenditure, world interest rates, capital controls and technological progress. Due to data limitations in Ghana and in Nigeria, not all the variables are utilised in the study. The study uses the Johansen (1995) model as well as the Vector Error Correction Model (VECM) to estimate the long- and the short-run relationships between the above-mentioned determinants and the real exchange rate. Thereafter the study employs the Hodrick-Prescott filter to estimate the permanent equilibrium exchange rate. The study estimates a real exchange rate model each for Ghana and Nigeria. Both the exchange rate models for Ghana and Nigeria provide evidence of exchange rate misalignment. The model for Ghana shows that from the first quarter of 1980 to the last quarter of 1983 the real exchange rate was overvalued; thereafter the exchange rate moved close to its equilibrium value and was generally undervalued with few and short-lived episodes of overvaluation. In regard to real exchange rate misalignment in Nigeria prior to the Structural Adjustment Program in 1986 there were episodes of undervaluation from the first quarter of 1980 to the first quarter of 1984 and overvaluation from the second quarter of 1984 to the third quarter of 1986; thereafter the exchange rate was generally and marginally undervalued.
- Full Text:
- Date Issued: 2011
- Authors: Mapenda, Rufaro
- Date: 2011 , 2011-11-09
- Subjects: Foreign exchange rates -- Ghana , Foreign exchange rates -- Nigeria , Economic development -- Ghana , Economic development -- Nigeria , Foreign exchange administration -- Ghana , Foreign exchange administration -- Nigeria , International relations
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:976 , http://hdl.handle.net/10962/d1002710 , Foreign exchange rates -- Ghana , Foreign exchange rates -- Nigeria , Economic development -- Ghana , Economic development -- Nigeria , Foreign exchange administration -- Ghana , Foreign exchange administration -- Nigeria , International relations
- Description: Exchange rates are believed to be one of the major driving forces behind sustainable macroeconomic growth and it is therefore important to ensure that they are at an appropriate level. Exchange rate misalignment is a situation where the actual exchange rate differs significantly from its equilibrium value, resulting in either an overvalued or an undervalued currency. The problem with an undervalued currency is that it will increase the domestic price of tradable goods whereas an overvalued currency will cause a fall in the domestic prices of the tradable goods. Persistent exchange rate misalignment is thus expected to result in severe macroeconomic instability. The aim of this study is to estimate the equilibrium real exchange rate for both Ghana and Nigeria. After so doing, the equilibrium real exchange rate is compared to the actual real exchange rate, in order to assess the extent of real exchange rate misalignment in both countries, if any such exists. In order test the applicability of the equilibrium exchange rate models, the study draws from the simple monetary model as well as the Edwards (1989) and Montiel (1999) models. These models postulate that the variables which determine the real exchange rate are the terms of trade, trade restrictions, domestic interest rates, foreign aid inflow, income, money supply, world inflation, government consumption expenditure, world interest rates, capital controls and technological progress. Due to data limitations in Ghana and in Nigeria, not all the variables are utilised in the study. The study uses the Johansen (1995) model as well as the Vector Error Correction Model (VECM) to estimate the long- and the short-run relationships between the above-mentioned determinants and the real exchange rate. Thereafter the study employs the Hodrick-Prescott filter to estimate the permanent equilibrium exchange rate. The study estimates a real exchange rate model each for Ghana and Nigeria. Both the exchange rate models for Ghana and Nigeria provide evidence of exchange rate misalignment. The model for Ghana shows that from the first quarter of 1980 to the last quarter of 1983 the real exchange rate was overvalued; thereafter the exchange rate moved close to its equilibrium value and was generally undervalued with few and short-lived episodes of overvaluation. In regard to real exchange rate misalignment in Nigeria prior to the Structural Adjustment Program in 1986 there were episodes of undervaluation from the first quarter of 1980 to the first quarter of 1984 and overvaluation from the second quarter of 1984 to the third quarter of 1986; thereafter the exchange rate was generally and marginally undervalued.
- Full Text:
- Date Issued: 2011
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