The Effect of Financial Development on Infrastructure Development in Ghana

Abstract

This study investigated the impact of financial development on infrastructure development in Ghana. The research comprehensively examined how a well-established financial sector influences infrastructure development and the extent of this influence. The study employed a quantitative research design and utilized time series models to analyze data spanning three decades, from 1990 to 2020. Descriptive statistics were predominantly used to analyze the data. The results indicated a significant and positive correlation between Financial Development and Infrastructure Development, as confirmed through the Granger Causality test. The findings also pointed to a durable relationship between these variables, as observed in the data analysis. This suggests that financial development holds predictive power in elucidating fluctuations in infrastructure development, underscoring its substantial role in shaping infrastructure growth. This correlation was further corroborated by the threshold effect, which highlights meaningful relationships between the variables with both statistical and practical significance. However, subsequent research could delve into assessing the enduring effects of diverse financing models on various outcomes of infrastructure development, including economic growth, employment, and social development indicators. A comprehensive understanding of the broader implications of these financing models can serve as valuable input for future policy decisions and investment strategies.