Financial Development, Public Health Financing, and Health Outcomes in Sub-Saharan Africa

Abstract Background This paper examines the effect of financial development on health outcomes in sub-Saharan Africa (SSA). The study decomposes financial development into access, depth, and efficiency and test their separate effects on health outcomes. The paper also examines interaction effect of public health spending and financial development on health outcomes. Methods This paper is based on panel data for forty-five countries in sub-Saharan Africa (SSA) collected from the World Development Indicators (WDI) of the World Bank and the International Monetary Fund (IMF) over the period 2000 to 2021. We adopt the 2-step system GMM as the estimation technique to examine the relationships among the variables. Results The findings show that improvement in financial development measures improves health outcomes in sub-Saharan Africa (SSA). The findings further show that, in SSA, higher out-of-pocket expenses lead to worsening health outcomes. The relationship between financial development and health outcomes in sub-Saharan Africa is strongly moderated by public health financing and out-of-pocket medical expenses. Conclusions The findings imply that financial development, public health financing, and out-of-pocket health expenditure are critical when it comes to health outcomes in sub-Saharan Africa. To lower infant and maternal mortality rates and raise life expectancy, actions must be taken to strengthen the financial system and lower household out-of-pocket medical expenses whilst increasing public health financing. These findings guide health policy formulation for the improvement of health outcomes in SSA.