<p>This paper investigates the dynamic interactions between financial stability and economic growth in the emerging markets of sub-Saharan Africa using the Structural Vector Autoregressive (S-VAR) estimation technique. The study analyses annual data from 1990 to 2022 obtained from the World Bank and International Financial Statistics to explore how various economic indicators, including money supply, domestic credit and inflation, affect GDP volatility. The results show that financial stability has a significant impact on economic growth, with money supply and domestic credit playing a key role in protecting against external shocks. Variance decomposition analysis shows that the impact of these factors on GDP has increased over time, while impulse response functions reflect the resilience of the economy to shocks and shed light on short-term inflation volatility. The study highlights the need for strong fiscal and macroeconomic policies to mitigate external shocks and promote sustainable economic growth. Policymakers are encouraged to focus on economic diversification and strengthening financial systems to effectively address the challenges posed by the region’s dynamic financial and economic interactions. These findings contribute to the understanding of the complex relationship between financial stability and economic growth in sub-Saharan Africa and provide valuable insights for future research and policymaking.</p>

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The dynamic interactions between financial stability and economic development in emerging Sub-Saharan Africa markets: evidence from S-VAR analysis

  • Mehdi Seraj,
  • Abdulmajeed Tsowa Muhammad

摘要

This paper investigates the dynamic interactions between financial stability and economic growth in the emerging markets of sub-Saharan Africa using the Structural Vector Autoregressive (S-VAR) estimation technique. The study analyses annual data from 1990 to 2022 obtained from the World Bank and International Financial Statistics to explore how various economic indicators, including money supply, domestic credit and inflation, affect GDP volatility. The results show that financial stability has a significant impact on economic growth, with money supply and domestic credit playing a key role in protecting against external shocks. Variance decomposition analysis shows that the impact of these factors on GDP has increased over time, while impulse response functions reflect the resilience of the economy to shocks and shed light on short-term inflation volatility. The study highlights the need for strong fiscal and macroeconomic policies to mitigate external shocks and promote sustainable economic growth. Policymakers are encouraged to focus on economic diversification and strengthening financial systems to effectively address the challenges posed by the region’s dynamic financial and economic interactions. These findings contribute to the understanding of the complex relationship between financial stability and economic growth in sub-Saharan Africa and provide valuable insights for future research and policymaking.