Financial development and economic growth: Empirical evidence from <scp>Sub‐Saharan</scp> Africa

Abstract This paper evaluates the impact of financial development on economic growth in a sample of 32 Sub‐Saharan Africa (SSA) countries. The countries were grouped into four sub‐regions, and data were collected for the period 1990–2016 on finance and growth indicators on an annual basis. In the estimation procedure, panel estimation and dynamic panel techniques were used. When the disaggregated components of financial development variables were used, findings, among others, reveal the role of credit to the private sector by banks (CPB) even though mixed, to have more impact on growth followed by broad money (BM) and liquidity liability (LL). However, an aggregated index of the financial development indicators via principal component analysis and their simultaneous interaction with human capital improvement brought about a greater positive impact on growth throughout the sub‐regions and the entire SSA.