Financial Dollarisation: Effects on Economic Growth in Ghana

Abstract

This study sought to examine the effects of financial dollarisation on economic growth in Ghana. The autoregressive distributed lag (ARDL) approach to cointegration was applied on quarterly data from the World Bank and Bank of Ghana (BOG) for the period of 1999 to 2018. It was revealed that financial dollarisation exhibited a negative and statistically significant effect on economic growth both in the short-run and long-run. Based on the findings, it is recommended that the Bank of Ghana should develop the financial market by continuing the implementation of the financial sector reforms to foster a growing financial sector to promote economic growth in the economy.

Keywords: Autoregressive distributed Lags, Financial dollarisation, Economic growth, Foreign currency deposit, Ghana.

DOI: 10.7176/JESD/11-19-03

Publication date:June 30th 2020