THE EFFECT OF FINANCIAL DEVELOPMENT ON THE OUTPUT OF MANUFACTURING INDUSTRIES IN GHANA

Main Article Content

ABIDA MOHAMMED

Abstract

This study was conducted purposely to determine the effect of financial sector development on the performance of manufacturing industries in Ghana. This was done using time series data spanning from 1983 to 2014. The study also specifically examined the trend dynamics (long run) of financial development and manufacturing value added per GDP relationship. The short run and long run effects of financial development on the output of manufacturing industry in Ghana were examined using the ARDL approach. Two proxy variables were used in measuring financial development. The study reveals that financial development measured by broad money supply to GDP has a significant positive effect on the output of manufacturing industry in Ghana both in the short and long run periods. However financial development measured by credit exerts no significant effect on the output of the manufacturing industries both in the short run and long run.  Thus, the study concludes that, the choice of indicators of financial development determines the direction and effect of financial development on the output of manufacturing industries in Ghana. For credit advanced to the manufacturing industries to yield the expected results, it is recommended that government should implement accommodating trade policies that will be favorable to the manufacturing sector. Moreover, the central bank should implement policies that will continue to create fierce competition in the financial sector which will make them more efficient.

Keywords:
Financial development, GDP relationship, ARDL approach, Ghana

Article Details

How to Cite
MOHAMMED, A. (2019). THE EFFECT OF FINANCIAL DEVELOPMENT ON THE OUTPUT OF MANUFACTURING INDUSTRIES IN GHANA. Journal of Global Economics, Management and Business Research, 11(2), 46-62. Retrieved from https://www.ikprress.org/index.php/JGEMBR/article/view/4418
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Original Research Article