Does financial development promote intra-regional trade in Sub-Saharan Africa? The muted synergistic effect of economic growth

Abstract

Intra-regional trade in Sub-Saharan Africa (SSA) remains limited despite regional integration efforts. Using system Generalized Method of Moments on 33 SSA countries (2006–2023), this study examines financial development’s role in promoting intra-regional trade, with economic growth as a complementary factor. Domestic financial development significantly enhances intra-SSA trade, but its interaction with economic growth is insignificant, revealing muted synergy. Partner countries’ financial development shows marginal positive significance. Home country economic growth is significant, while partner growth is not. Policymakers should develop domestic financial systems, pursue financial harmonization and better integrate financial and broader productive real sectors to boost intra-SSA trade.