Abstract
The interaction between institutional phenomena such as political stability and democracy and the financial system is an important issue that has been researched for many years. For this reason in this study, the effects of political stability and democracy on the financial system in Sub-Saharan African countries during the period from 2002 to 2019 are investigated. In the study, in which the Two-Stage System Generalized Moments Method estimator is used, the dependent variable is the financial institutions development index. The explanatory variables of the study are the indicators of political stability and democracy. The growth in GDP per capita, trade openness, inflation rate, foreign direct investment and urban population ratio are the control variables. The analyzes display that democracy and political stability have positive effects on financial development. In terms of control variables, while the inflation rate has a negative effect on financial development, the economic growth and trade openness affect financial development positively.
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