Essays on legal systems, property rights and financial development in Sub-Saharan Africa

Abstract

Sub-Saharan Africa faces many challenges such as poverty, inequality, conflict, corruption, and weak institutions. However, it also has potential for economic growth and development due to its abundant natural resources, young population, and increasing global integration. Financial development has been severally shown to improve economic growth, reduce unemployment and ensure price stability. This study examines the relationship between legal systems and property rights, financial development and economic growth, inflation, and unemployment. The study consolidates three empirical chapters that links legal systems and property rights, financial development and economic growth, inflation, and unemployment. Using GMM and SUR models, the study find that legal systems and property rights positively influence financial development when aggregated and financial institutions and markets. In the second empirical paper, the study find that economic growth, inflation and unemployment were influenced by financial development. The study further find that the relationship is further enhanced by the existence of legal systems and property rights. In the third empirical paper, using an ARDL and a Markov-Switching regression, the study find that financial development was significantly influenced by openness policies proxied by capital account openness and trade openness. The study conclude that financial development is crucial for economic growth, inflation and unemployment and that the relationship is further enhanced when there exist well enforced legal systems and property rights in Sub-Saharan Africa. The study recommend policy be focused on development of the institutional frameworks in Sub-Saharan Africa.