The Nexus Between Financial Integration and International Trade Flows in Sub-Saharan Africa

Abstract

This study examines the linkages between financial integration and international trade flows in SubSaharan Africa (SSA) countries. It applies the two- stage least square (2SLS) technique to examine the contribution of financial integration on trade of goods and services using panel data on 20 SSA countries over the period 2001 to 2015. results indicate most financial integration indicators (liabilities, assets, foreign direct investment, and debts) have positive and significant effects on trade of goods and services. This result is robust to alternative notably trade of goods and services into import and export of goods and services. We therefore recommend that policy-makers of SSA countries put in place appropriate macroeconomic policies that will improve the quality of financial markets.