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

Abstract

PurposeThis 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/approachThe study employs a non-linear autoregressive distributed lag (ARDL) time series econometric model to estimate data from the World Bank (1960–2019).FindingsThere 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 implicationsPolicymakers must empirically explore the impact of early and strict regulation on the transformational impact of FI.Originality/valueThe paper is among the first to apply a broader conceptualization of FI in estimating the impact of FI on economic growth.