Revisiting Drivers of Financial Development in Sub‐Saharan Africa: A Dimension‐Specific Analysis and Ranking of Determinants

This study examines the drivers of financial development in Sub‐Saharan Africa (SSA) using a dimension‐specific framework that disaggregates financial development into financial institutions (FI), financial markets (FM) and a composite index (FD). Using panel data for 35 SSA countries over the period 2000–2023, the study employs Panel‐Corrected Standard Errors (PCSE) estimation, dominance analysis and System GMM as a robustness check. The findings reveal that institutional quality and human development are the most dominant drivers of financial development across all dimensions, with institutional quality leading for FI and FD, and human development emerging as the foremost determinant of FM. Digitalisation significantly promotes overall financial development and FI but exerts no significant effect on FM, while unemployment and inflation impose significant negative effects across dimensions. Economic growth remains largely insignificant, suggesting that structural and institutional factors outweigh short‐term macroeconomic conditions in shaping financial outcomes in SSA. Dominance analysis further confirms the heterogeneous importance of determinants across dimensions, underscoring the multidimensional nature of financial development in the region. The findings call for dimension‐specific reforms that prioritise governance quality, human capital development, digital financial infrastructure, macroeconomic stability and employment creation to achieve sustainable financial deepening across SSA.