Monetary Policy and Financial Inclusion in Sub-Sahara Africa: A Panel VAR Approach

Ebenezer Bugri Anarfo, Joshua Yindenaba Abor, Kofi Achampong Osei, Agyapomaa Gyeke-Dako

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31 Citations (Scopus)

Abstract

This article investigates the dynamic and bi-causal link between monetary policy and financial inclusion in sub-Saharan Africa using a panel VAR framework. The researcher obtained data from World Development Indicators (WDI) spanning from 1990 to 2014 for 48 sub-Saharan African economies. The findings suggest that a bi-causal relationship exists between monetary policy and financial inclusion. Specifically, it is evident that monetary policy affects financial inclusion, and financial inclusion is also influenced by monetary policy. The policy implication of this study is that the effectiveness of monetary policy depends on financial inclusion. Hence, the efforts of governments in sub-Saharan African countries should aim at policies that enhance financial inclusion for effective implementation of monetary policy. Also, promoting financial inclusion will require governments in sub-Saharan Africa to reduce their monetary policy rates.

Original languageEnglish
Pages (from-to)549-572
Number of pages24
JournalJournal of African Business
Volume20
Issue number4
DOIs
Publication statusPublished - 2019

Keywords

  • GDP growth rate
  • Monetary policy
  • effective exchange rate
  • financial inclusion
  • inflation rate
  • real

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