Impact of Financial Sector Reforms on Domestic Consumption in Sub-Sahara Africa

This study examined the impact of financial sector reforms on domestic consumption in Sub-Sahara Africa. The specific objectives of this study include to: Investigate the impact of financial deepening, financial liberalization and digital financial innovation on domestic consumption in Sub-Sahara Africa for the period 2009 to 2023. The method of data analysis was Fully Modified Least Square method. The empirical results of the study showed that financial deepening has positive and significant impact on domestic consumption in Sub-Sahara Africa because [t-Statistics; 6.1114; P-value (0.0005) < significant value (0.05]. Digital financial innovation has positive and significant impact on domestic consumption in Sub-Sahara Africa because [t-statistic; 9.1831; P-value (0.0000) > its significant value (0.05]. Financial liberalization has positive and significant impact on domestic consumption in Sub-Sahara Africa [t-statistic; 7.4616; P-value (0.0007) < significant value (0.05]. The empirical result showed that there is no directional causal relationship between financial sector reforms and domestic consumption in Sub-Sahara Africa. The study recommended that monetary authorities of Sub-Sahara African countries should continue pursuing financial sector reforms such as financial liberalization, financial deepening and digital financial innovation that emphasize quality rather than quantity to promote economic growth. Financial sector reforms should be pursued in conjunction with macroeconomic stability policies directly aimed at promoting macroeconomic stability conditions.