International Journal in Management & Social Science
Year : 2015, Volume : 3, Issue : 7
First page : ( 52) Last page : ( 62)
Online ISSN : 2321-1784.

What is The Effect of Inflation on Financial Development in Ghana?

Kwame Richardson Adjei Mensah

Department of Accountancy, Sunyani Polytechnic, Ghana

Jel Classifications: E31, E31, F43

Online published on 22 June, 2018.

Abstract

The paper examines the long run and short run link among financial development, inflation, and economic growth in Ghana for 1970–2012 period by using autoregressive distributed lag model (ARDL). The bound test results indicate significant cointegration among the variables. The results on the long run elasticities indicate that, the economic growth and inflation are not significant explanatory variables of financial development. In the short run, inflation was found to significantly affect financial development negatively. The results suggest that inflation does not play an important role in financial development in the long run but in the short run. Causality issues are worth examining in future studies as well as structural breaks in unit root.

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Keywords

Financial sector development, inflation, economic growth, ARDL.

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