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Financial development, public health financing, and health outcomes in Sub-Saharan Africa
Abubakar Musah1, Godfred Aawaar2, Godwin Musah3
1Department of Banking and Finance, University of Professional Studies, Accra, Ghana. sidiqitrust@gmail.com.
Background:
This paper examines the effect of multi-dimensional financial development on health outcomes in sub-Saharan Africa (SSA). The study decomposes financial development into access, depth, and efficiency and tests their separate effects on health outcomes. The paper also examines the interaction effect of public health spending and financial development on health outcomes.
Methods:
This paper is based on panel data for forty-five countries in sub-Saharan Africa (SSA) collected from the World Development Indicators (WDI) of the World Bank and the International Monetary Fund (IMF) over the period 2000-2021. This study adopts the 2-step system Generalised Method of Moments (GMM) as the estimation technique to examine the relationships among the variables. This robust approach is chosen to effectively address potential issues of endogeneity, reverse causality, and unobserved country-specific heterogeneity inherent in the relationship between financial development and health outcomes.
Results:
The findings show that improvement in financial development measures improves health outcomes in sub-Saharan Africa (SSA). The findings further show that, in SSA, higher out-of-pocket expenses lead to worsening health outcomes. The relationship between financial development and health outcomes in sub-Saharan Africa is strongly moderated by public health financing and out-of-pocket medical expenses, suggesting important synergistic and mitigating effects.
Conclusions:
The findings imply that financial development, public health financing, and out-of-pocket health expenditure are critical when it comes to improving health outcomes in sub-Saharan Africa. To lower infant and maternal mortality rates and raise life expectancy, policymakers must implement targeted actions to strengthen the financial system and lower household out-of-pocket medical expenses whilst increasing public health financing. These findings guide health policy formulation for the improvement of health outcomes in SSA.
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