The nexus between financial inclusion, trade and economic growth in Africa?

Abstract

Numerous studies have investigated the nexus between economic growth and financial inclusion, or between economic growth and trade openness. This paper advanced on earlier work and uses granger causality tests and cointegration techniques so as to establish whether there exists a long-run equilibrium relationship between all three variables in Africa using a panel of 30 African countries for the period 2004–2017. Study findings unveil a unidirectional causality relationship from economic growth to financial inclusion; from economic growth to trade in Africa. In particular, enhancing financial inclusion in the financial system promotes the trade-growth nexus. We recommended policy makers to concentrate on pro-growth policies so as to enhance financial inclusion which drives trade.