Combined Effects of Institutional Quality and Financial Development on Macroeconomic Performance in Sub-Saharan African Countries

The objective of this paper is to show the importance of institutional quality as a factor enhancing the contribution of financial development to macroeconomic performance in SSA. In this context, we first present the theoretical literature and the empirical debates on the subject. Next, we derive an endogenous growth model that addresses the relationship between financial development, institutional quality, and macroeconomic performance. Finally, two dynamic panel models were estimated using the GMM method over the period from 2010 to 2017 and on a sample of 38 SSA countries. The estimation results reveal that institutional quality is considered as an important factor to be taken into account in analyzing the impact of financial development on macroeconomic performance.