Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD
📄 Download Paper

Financial Integration and Economic Development of West African Countries

ADIEVUGHWARE, Ochuko Favour, EMMANUEL, Evidence Osaro, and, EHIEDU, Victor C, PhD

Abstract

This study examined the relationship between financial integration and economic development in West African countries, using data from 1990 to 2024. The research specifically explored how various components of financial integration, such as Cross-Border Capital Flows, Portfolio Investment, Interest Rate Parity, Credit to GDP Ratio, and Trade to GDP Ratio, impacted the Human Development Index (HDI) in the region. A panel data methodology was used, applying both fixed and random effects models to investigate these relationships. The findings revealed that while Cross-Border Capital Flows did not significantly affect HDI, Portfolio Investment, Interest Rate Parity, Credit to GDP Ratio, and Trade to GDP Ratio all had significant positive effects on HDI. These results aligned with Financial Integration Theory, which suggests that greater financial market integration can stimulate economic growth and improve human development. However, the study also recognized the risks associated with external capital flows, particularly in politically unstable regions, as highlighted by Dependency Theory. The study recommended that West African countries focus on improving political stability and strengthening institutional frameworks to better manage financial integration. Enhancing financial market liberalization and ensuring that the benefits of financial integration are channeled toward human development were also key recommendations. In conclusion, the study demonstrated that financial integration can significantly contribute to economic and human development in West Africa. However, for these benefits to be fully realized, strong institutions, inclusive policies, and political stability are essential. The study suggests that the region can achieve sustainable development by aligning financial integration with broader social development objectives, ensuring that financial resources are effectively utilized to improve education, healthcare,

Keywords

Financial IntegrationCross-Border Capital FlowsPortfolio InvestmentInterest

References

Adamu, B., & Kanu, L. (2024). The role of portfolio investment in West African financial markets. International Journal of Financial Studies, 31(1), 22-35. Adebayo, A., & Oladipo, I. (2023). Trade openness and economic growth in West Africa: An empirical analysis. West African Economic Review, 40(2), 55-71. Adebayo, M., & Oladipo, A. (2023). Financial integration and development in West Africa: A critical review of Dependency Theory. West African Journal of Economic Development, 39(1), 22-39. Adeyemi, T., & Adebayo, M. (2024). Financial integration and economic development in West Africa: Theories and challenges. Journal of African Economic Policy, 55(2), 112-130. Agbogun, O. E., and Ehiedu, V. C. (2022). Trade policy drivers and economic performance of OPEC Member States. International Journal of Academic Accounting, Finance, and Management Research, 6(8), 109-118. Akpan, S. (2023). The role of interest rate parity (IRP) in financial integration and economic development in West Africa. African Journal of Financial Studies, 22(4), 89-103. Aliyu, M., & Zakaria, Z. (2022). Human development and economic growth in West Africa: Analyzing the link with financial integration. Journal of Development Economics, 51(3), 202-220. Anifowose, O., & Chummun, R. (2025). Regulatory barriers to cross-border capital flows in West Africa. International Journal of Financial Integration, 41(2), 112-128. ANUKU, C.E.O and EHIEDI, Victor Chukwunweike (2007). Financing Micro-Industries in Nigeria for Sustainable Development. Journal of Public Policy Alert/ Association for Public Policy Analysis (APPA)/ Aba. Abia State. Pp.75-89. Vol. 1(1) Aremu, A., & Olalekan, O. (2023). Credit-to-GDP ratio and economic development in West Africa: The role of human development indicators. African Economic Policy Journal, 47(1), 101-118. Bello, O., & John, M. (2023). Financial integration and economic growth in Africa: A case study of West African countries. African Journal of Economic Policy, 52(3), 156-175. Bist, J. (2025). Financial integration in West Africa: Status, challenges, and the way forward. Journal of Development Economics, 27(1), 12-29. Chin, R. (2024). Cross-border capital flows and economic development in West Africa: A critical assessment. Global Economic Review, 42(2), 128-144. Diallo et al (2024). The challenges of capital mobility in West Africa: Analyzing the impact of financial regulations. Journal of International Finance and Economics, 39(3), 85-101. Ehiedu Victor C (2015). Impact of Interest Rate Deregulation on Corporate Financial Strategies (CFS) of Manufacturing Industries in Nigeria. Ph.D Thesis, Department of Accounting, Banking and Finance, Delta State University, Abraka, Nigeria Ehiedu, Victor Chukwunweike. (2021). Policy Options for Nigeria on Fiscal Responsibility. Journal of Finance, Governance and Strategic Studies. Collaborative Research (CORE) Associates. Faculty of Humanities, Management and Social Sciences. Federal University, Wukari. Taraba State. Nigeria. Pp. 19-34, 4(2) Ehiedu, Victor Chukwunweike. (2021). Minimum Rediscount Rate and Credit Creation by Deposit Money Banks in Nigeria. Nigerian. Journal of Financial Research/ Department of Finance and Banking. University of Port Harcourt. Pp. 80-93, 16(1) Ehiedu, Victor Chukwunweike. (2021). Determinants of Deposit Accumulation Strategies of Deposit Money Banks (DMBs) in Nigeria. African Journal of Accounting, Finance and Marketing/ University of Port Harcourt Business School. Pp. 32-54, 5(1) Ehiedu, Victor C and Ogbeta, Mercy. (2014). An Investigation into the Internal Control System in the Banking Industry (A Case of Some Selected Banks in Asaba, Delta State. European Journal of Business and Management. ISSN 2222-1905 (Paper) ISSN 2222- 2839 (Online). International Institute for Science, Technology & Education, UK. Pp. 149- 155, 6(9) Ehiedu, Victor C and Osiegbu P.I. (2014). Capital Structure and Performance Evaluation in Manufacturing Sector: A Case Study of Selected Quoted Companies in the Nigerian Stock Exchange (NSE). Research and Journal of Finance and Accounting. ISSN 2222- 1697 (Paper) ISSN 2222-2847 (Online). International Institute for Science, Technology & Education, UK. Ehiedu, Victor C. (2014). The Impact of Liquidity on Profitability of Some Selected Companies. The Financial Statement Analysis (FSA) Approach. Research and Journal of Finance and Accounting. ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online). International Institute for Science, Technology & Education, UK.. Pp. 81-90. 5(5) Ehiedu, Victor C, (2022). External Debt (ED) and Growth Nexus (GN) in Nigeria. International Journal of Academic Management Science Research (IJAMSR)/. Academic Research World (IJARW). Pp. 58-68, 6(7). Ehiedu, Victor C. (2022). Monetary Jeopardy (MJ) and Nigeria’s Deposit Money Bank Performance (DMBP) Relationship: ARDL Approach. International Journal of Advanced Economics P-ISSN: 2707-2134, E-ISSN: 2707-2142 DOI: 10.51594/ijae.v4i8.409 Fair East Publishers. Pp. 180-198, 4(8) EHIEDU Victor C. (2023). Tax Returns and Development of Infrastructure: The Nigerian Experience. Journal of Xidian University. DOIhttps://doi.org/10.37896/jxu17.2/028. ISSN No. 1001-2400. University of Xidian Publications. Pp. 400-412. 17(2) EHIEDU Victor C. (2023). Trade Drivers and Balance of Payment Equilibrium in Nigeria: Pre and Post Covid-19 Era. Journal of Xi’an University of Architecture & Technology. . DOI: https://doi.org/10.37896/JXAT15.3/31756. ISSN No: 1006-7930. Xi’an University of Architecture & Technology. Pp. 77-96. 15(3) EHIEDU Victor C. (2023). Financial Innovation (FIs) and Performance of Deposit Money Banks (PMDBs) in Nigeria. Innovations. 19650256 (E) 12674982(P). 62 Rue Pierre Motte. Saint-Dizier. Champagne-Ardenne. France 44522. Innovations Publications. Pp. 573- 72(03) EHIEDU Victor C and Toria Gladys, (2022). Audit Indicators and Financial Performance of Manufacturing Firms in Nigeria. Linguistics and Culture Review. Pp. 14-41 6(S1). https://doi.org/10.21744/lingcure.v6nS1.1887. (Special Issue on Economics, Accounting and Management EAM). American Linguist Association. New York. USA. Ehiedu, V.C. and Obi, C.K, (2022). Efficient market hypothesis (emh) and the Nigerian stock Exchange in the midst of global financial crisis. International Journal of Academic Management Science Research (IJAMSR)/. Academic Research World (IJARW). Pp. 263-273 Ehiedu V.C and Imoagwu C.P, (2022). Effect of corporate diversification strategies on the financial performance of industrial goods in Nigeria. International Journal of Applied Research in Social Sciences P-ISSN: 2706-9176, E-ISSN: 2706-9184 DOI: 10.51594/ijarss.v4i8.390 Fair East Publishers Ehiedu Victor C, and Imoagwu Chika Priscilla, (2022). Firm specific determinants and its implication on listed oil and gas firms profitability in Nigeria. International Journal of Advanced Economics P-ISSN: 2707-2134, E-ISSN: 2707-2142 DOI: 10.51594/ijae.v4i7.389 Fair East Publishers Ehiedu V.C. (2022).Corporate Finance Alternative and Shareholders’ Value Creation in Nigeria. International Journal of Academic Accounting, Finance & Management Research(IJAAFMR). Research (IJAAFMR). International Journals of Academic Research World (IJARW). Pp. 26-33, 6(6) Ehiedu, V. C. (2022). Analysis of micro prudential determinants of capital adequacy in deposit money banks. International Journal of Management & Entrepreneurship Research, 4(11), 398-415. Ehiedu, Victor C, (2022). Deficit financing (df) and sustainable growth (sg) in a small open economy. International Journal of Academic Accounting, Finance & Management/ Research (IJAAFMR). International Journal of Academic Research World (IJARW). Pp. 1-96(7) Ehiedu Victor C. and Brume-Ezewu, Christi

More Articles from IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH

Effect of Monetary Policy on Profitability of Deposit Money Banks in Nigeria

Author: Stephanie Nguhemen Gbande, Mike T. Soomiyol, Timothy Tyona, Gaius Msendoo Asombo

Examining the Impact of Corporate Social Responsibility on Financial Performance: Evidence from Small and Medium-Sized Enterprises in Hanoi

Author: Nguyen Mai Phuong

Cognitive Diversity and Performance of Deposit Money Banks in Nigeria

Author: 1Nwangwu, Okwudiri Iheanyi, 2 Pepple, Grace Jamie PhD

Banking Innovations and Industrial Sector Performance in Nigeria: Evidence from ARDL Model

Author: Peter Ngbede Ajam, Abiodun Edward Adelegan, Benson Emmanuel

Environmental Sustainability and Entrepreneurial Performance in Nigeria: A Case Study of Enugu State

Author: i, Azolike Nkiru Nkechi, ii, Okwor Emmanuel Ejimnkonye, iii, Eneaniofu Daniel Mmaduakonam