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Lightening the Path to Financial Development: The Power of Electricity

Pan, Lei and Dwumfour, Richard Adjei and Kheng, Veasna (2022): Lightening the Path to Financial Development: The Power of Electricity.

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This paper examines the impact of access to electricity on financial development. In doing so, we use plausibly exogenous variations in population density as an instrument for electrification rate. Using panel data for 44 countries in Sub-Saharan Africa over the period 2000 to 2018, the results suggest that more people having access to electricity can promote financial development. In addition, mobile phone and commercial bank branches diffusion serve as potential channels through which access to electricity affects financial development. The results have important implications for policies in overcoming barriers to electricity access.

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