Trade Openness, Institutions and Financial Development in Sub-Saharan Africa

The study aims to determine the connection between trade openness, institutions and financial development for 26 countries in sub-Saharan Africa over the period 1982-2016. The analysis relies on system GMM estimation with 5-year (non-overlapping) averaged data. The results reveal no evidence of a significant impact of trade openness on financial development. There is, however, evidence of a positive (though statistically weakly significant) impact of institutional quality on the development of the financial sector. There is also no evidence of a significant joint impact of the trade openness and institution quality on financial sector development.