The Interaction Between Financial Integration, Financial Development, and Economic Growth: An ECOWAS Case Study

From 1995 to 2022, this study looked at the relationship between Financial market integration and economic growth in the ECOWAS sub-region. The Pool Mean Group technique was used to analyze the data, which is an Auto Regressive Distributive Lag (ARDL) model that is good for panel data with cross-sectional dependencies and heterogeneities, the authors find the current level of financial integration among ECOWAS member to be extremely low, when integration was measured as the ratio of a country's financial assets to the regional pool, only four countries in the sub- region were found to be more integrated. The ECOWAS region should pursue a broad-based and all-encompassing integration strategy aimed at strengthening member countries' domestic institutions, further institutional changes are necessary in the ECOWAS sub-region, particularly in the legal processes. The deployment of broad-based financial markets integration through instruments that alter interest rates and central bank assets requires policy coordination to avoid potential detrimental consequences of financial integration on domestic financial development. The novelty of this research comes in the use of the Pool Mean Group technique to examine the interaction between financial integration, financial development, and economic growth in the context of the Economic Community of West African States.