“This study identifies the range of financial assets that can adequately approximate financial deepening,which simply means an increase in the supply of financial assets in the economy. FD is represented by two variables, the degree of financial intermediation / development (M2/Y) and the growth rate in per capita real money balances (GPRMB). Because of lack of data on other measures of financial assets in most SSA countries, broad money (M2) was used as numerator for both variables. Two policy implications derive from the study: that SSA countries should strive hard to make real money balances grow,and that these countries should also come up with policies to improve financial development/intermediation. Given such factors as price stabilization, elimination of fiscal deficit and removal of various restrictions on financial institutions, real money balances could be made to grow. Financial intermediation/
development could positively affect output growth if, among other suggested ways, the
volume of investment is raised.”
