Financial development and the economy: a comparative analysis of policy between Africa and Asia

Abstract

This study examines the factors influencing financial development in 30 countries (15 from Africa and 15 from Asia) from 1991 to 2021. Using the Driscoll and Kraay (1998) standard errors with a fixed-effects regression model, the findings reveal that macroeconomic stability, regulatory quality, and human capital are significant for financial development in Africa. In Asia, macroeconomic stability, human capital, natural resources, and technology play key roles, while inflation and investment negatively impact financial development. Policy recommendations for Africa include strengthening trade facilitation, regulatory frameworks, higher education, financial inclusion, and public-private partnerships. For Asia, monitoring natural resource dependency and adopting digital technologies are crucial. Collaboration with international organizations and private sector stakeholders is emphasized for sustainable financial growth.