Harnessing the synergies of independent central banks and human capital for enhanced financial sector development in Africa

Abel Mawuko Agoba, Ebenezer Bugri Anarfo, Yakubu Awudu Sare

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Abstract

Using panel data from 2004 to 2012, we employ a two-step system GMM estimation technique, with robust standard errors, collapsed instruments and illustrate marginal effects of central bank governor turnover rates on financial development given various measures of literacy rates to examine the impact of central bank independence on financial development in Africa and the moderating roles of literacy rates on the CBI-financial development nexus. Human capital enhances the positive impact of dejure CBI on financial development in countries with higher literacy rates and worsens the negative impact of de facto CBO on financial development. Independent central banks can be made more effective in achieving financial development targets through governments improving literacy rates. The study is the first to empirically examine the impact of central bank independence on financial development using both dejure and de facto CBI measures and literacy rates in explaining this relationship.
Original languageEnglish
Article number2128585
Number of pages23
JournalCogent Economics and Finance
Volume10
Issue number1
Early online date28 Sept 2022
DOIs
Publication statusPublished - 31 Dec 2022

Bibliographical note

This open access article is distributed under a Creative Commons
Attribution (CC-BY) 4.0 license.

Keywords

  • Economics and Econometrics
  • Finance
  • Literacy Rates
  • Africa
  • Financial Development
  • Developing Countries
  • Central Bank Independence
  • Emerging Markets

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

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