Human capital, financial sector development and inclusive growth in sub-Saharan Africa

This paper examines the role of financial development in the human capital-growth relationship. The core activity of this study involves the use of different measures of human capital (school enrolment and total factor productivity) in the examination of its impact on inclusive growth and interrogating how financial sector serves as catalyst in this process. We explore the system generalized method of moments estimation technique to examine this relationship in 19 sub-Saharan African countries between 1999 and 2014. The findings show indications of largely positive direct impact of both human capital and financial development on inclusive growth. The results also show that financial development promotes the extent to which human capital can facilitate inclusive growth, however the choice of measures of both human capital and financial development are important in examining their complemental influence on inclusive growth. Thus, enhancing the efficiency of the financial sector through reforms would have greater spillover effect on human capital development thereby promoting growth inclusiveness.