Trade Liberalization and Sustainable Economic Growth in Sub-Saharan Africa: Does Financial Inclusion Matter?

This present study explores the extent to which financial inclusion influences the impact of trade liberalization on sustainable economic growth. The empirical studies on the effects of trade liberalization on sustainable economic growth are inconclusive. More importantly, how financial inclusion mediates the relationship between trade liberalization and sustainable economic growth remains unexplored. We address these research gaps by employing the quantile fixed effects-OLS regressions model on data spanning the period 2000 to 2021 for 48 SSA countries. The effect of trade liberalization on sustainable economic growth proves to be affected positively by financial inclusion, and the effect of financial inclusion on sustainable economic growth is positively strengthened by an increase in trade liberalization. The study shows that there is a causal relationship between trade liberalization, financial inclusion, and sustainable economic growth. Our study shows novelty in that the marginal effects on sustainable economic growth increase when trade liberalization interacts with financial inclusion in SSA.