Linear and non-linear ARDL estimation of financial innovation and economic growth in Ghana

Abstract

Purpose – This study aimed to explore the effect of Financial Innovation (FI) on economic growth in Ghana, with a dataset spanning 1960–2019, adopting a broader conceptualization of FI as the ratio of broad money to narrow money. Design/methodology/approach – The study employs a non-linear autoregressive distributed lag (ARDL) time series econometric model to estimate data from the World Bank (1960–2019). Findings – There is no evidence that FI significantly impacts economic growth. This could be due to the early and strict regulation of the financial technology (FIN-TECH) sector and the general inconclusiveness of the impact of financial development on economic growth. Practical implications – Policymakers must empirically explore the impact of early and strict regulation on the transformational impact of FI. Originality/value – The paper is among the first to apply a broader conceptualization of FI in estimating the impact of FI on economic growth.

Keywords

• Economic growth
• Financial innovation
• FIN-TECH
• Ghana
• Non-linear autoregressive distributed lag
• Regulation