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|Title: ||Do Financial Sector Reforms Promote Private Sector Investment? The Case of Ghana|
|Authors: ||Kamasa, Kofi|
|Issue Date: ||12-Apr-2013|
|Abstract: ||Extensive government intervention characterised financial sector policies in the post-independence period. Repression of the financial sector caused severe financial shallowing in Ghana. Ghana as part of Structural Adjustment Program (SAP) in 1986 implemented Financial Sector Adjustment Program (FINSAP), which was followed up in 2003 with the Financial Sector Strategic Plan (FINSSP). The question arising is whether these reforms has aided private sector investment in Ghana; given the fact that some countries have reported higher savings and investment, whiles others have worsened disasters in economies that undertook financial reforms.
This study sought to investigate whether financial sector reforms promote private sector investment in Ghana. The study developed an index for financial sector reforms by following an IMF Working Paper by Abiad et al (2010), which took into account the multifaceted nature of financial reform and records financial policy changes along seven different dimensions: credit controls and reserve requirements, interest rate controls, entry barriers, state ownership, policies on securities markets, banking regulations, and restrictions on the financial account. Reforms scores for each category were then combined in a graded index. By employing Fully Modified Least Squares (FMOLS) cointegration regression the study found that financial sector reforms promote private sector investment in Ghana as far as the study period is concerned. When the reforms were decomposed into types, behavioural and competitive reforms were found to be positive and impact significantly on private sector investment. However, behavioural reform was positive but insignificant. It was also identified that GDP per capita, public investment, deposit interest rate and inflation all have positive impact on private sector investment for the study period.
The study recommended for deepening the financial sector reforms in the country. In addition, the study recommended for low and stable inflation as well as fiscal discipline on the part of government.|
|Description: ||A Thesis Submitted to the Department of Economics, Kwame Nkrumah University of Science and Technology
In Partial Fulfilment of the Requirements for the Degree of
Master of Philosophy in Economics, April-2013|
|Appears in Collections:||College of Arts and Social Sciences|
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