Browsing by Author "Dodoo, Samuel Nii Amu"

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    Financial deepening and economic growth in Ghana
    (July 2015) Dodoo, Samuel Nii Amu
    This study examined the relationship between financial deepening and economic growth in Ghana using quarterly time series data from 1983 to 2008. Specifically, it investigated the long-run and causal relationship between financial deepening and economic growth in Ghana using the cointegration, vector error correction (VECM), vector autoregressive (VAR) and Granger causality approaches. The results of the cointegration analysis showed the presence of one long-run relationship among real GDP per capita, credit to private sector to GDP, gross fixed capital formation to GDP and real interest rate. No cointegration was found when financial deepening was measured by M2Y. Capital stock and financial deepening in the long-run model exhibited positive and significant relationship with economic growth (real GDP per capita) except for real interest rate which was negatively related to growth. The results of the Granger-causality test suggested a bi-directional causality between economic growth and financial deepening when the ratio of credit to private sector to GDP was used to proxy financial deepening. Similarly, the study found a bi-directional causality between the share of gross fixed capital formation to GDP and economic growth and between financial deepening and interest rate. However, the direction of causality changed to unidirectional running from economic growth to financial deepening when the ratio of broad money to GDP was used to proxy financial deepening.