Government expenditure impacts on financial development: Do population age structures moderations matter?

PurposeThis study examined the roles of public spending and population moderating characteristic structure of selected African economies on bank-based financial development through credit to private sector.Design/methodology/approachThe study sampled 37 selected African economies for the years 1991–2018, and it applied a pooled mean group (PMG) estimator to account for short-run and long-run causal effects, and confirmed short-run adjustments towards the long-run convergences between the variables. Specific suitable tests were also applied.FindingsEvidence confirms positive impacts of both capital formation and final consumption expenditures on financial development in the short run and long run. The moderation of population structures on expenditure structures help to speed up convergences.Originality/valueThis work attests its innovation by accounting for the separate effects of the expenditure types, the moderation effects of young and mature populations for capital and final consumption expenditure on financial development among selected economies in Africa.