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Student
Title
Supervisor
Faculty
Educational Programme
Final Grade
Year of Graduation
Peter Dotsevia
The Impact of Bank-Based Financial System on Economic Growth in Ghana
Finance
(Master’s programme)
2018
Abstract

The objective of this paper is to address a country-specific issue, assess and empirically understand the impact of the Bank-based financial system on economic growth in Ghana. Ghana's banking sector is one of the sectors that are highly recognized helping investors acquire loans and also assisting and guiding individual investors in the type of business they want to venture in West Africa and playing an essential part in the operations of the Ghanaian economy. The study stands out in its bid to bring to light the correlation between the financial system and growth in the economy of Ghana and provide a policy advice for the country as well as first-hand information for foreign investors who would like to weigh the odds before investing in Ghana. This study applies the Johansen Co-Integration and normalized regression equation approach in analyzing its results. The empirical results of this study show that bank-based financial system has a statistically significant negative effect on economic growth in the long run. Again, in the short run, domestic credit provided by the financial sector has a statistically significant negative impact on economic growth. This means that the banking sector in Ghana has a negative impact in explaining economic growth. This supports the idea that countries that do not channel their savings by financial systems in the best and efficient way could experience deterioration in their economic growth although they have enough savings. Again, the coefficient of Investment is statistically significant with negative impact while Savings is statistically significant with positive impact in explaining economic growth in the long run. However, there exist positive short-run causality on economic growth running from investment and savings to GDP at 5% significant level in Ghana respectively.

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