Financial Sector Reforms and Private Investment in Sub-Saharan African Countries

Financial sector reforms have been undertaken by many countries in Sub-Saharan Africa and one of the key targets of these reforms has been investment. This study conducts an empirical investigation of the effect of financial sector reforms on private investment in selected Sub-Saharan African countries. An index is developed which tracks the gradual progress made with implementation of the phases of the reforms. The results of econometric estimations show that financial sector reforms (measured by the index) have had a positive effect on private investment in the selected countries, thus offering support to the financial liberalization hypothesis.