What is The Effect of Inflation on Financial Development in Ghana?

The paper examines the long run and short run link among financial development, inflation, and economic growth in Ghana for 1970–2012 period by using autoregressive distributed lag model (ARDL). The bound test results indicate significant cointegration among the variables. The results on the long run elasticities indicate that, the economic growth and inflation are not significant explanatory variables of financial development. In the short run, inflation was found to significantly affect financial development negatively. The results suggest that inflation does not play an important role in financial development in the long run but in the short run. Causality issues are worth examining in future studies as well as structural breaks in unit root.