Operational risk management, financial sector stability and sustainable development in West Africa

Abstract

Achieving sustainable development in West Africa is vital for integrating environmental, social and economic well-being in the region. This study examines the impact of operational risk management and financial sector’s stability on sustainable development in West Africa, focusing on countries that are members of the Economic Community of West African States (ECOWAS) from 2015 to 2022. Data from the World Development Indicators (WDI) and country Policy and Institutional Assessment (CPIA) were analyzed using the systems GMM to control for endogeneity. The study found conflicting results for financial sector stability’s impact on adjusted net savings and the sustainable development index. While financial sector stability had a negative effect on adjusted net savings, it had a positive impact on the sustainable development index. Additionally, environmental taxes were found to contribute to sustainable development by promoting efficiency and reducing carbon emissions. In conclusion, addressing operational risks, ensuring financial sector stability and promoting sustainable development can help achieve SDGs 8, 9, and 11, creating a stable, inclusive, and resilient economic environment conducive to long-term growth and sustainability in West Africa.