Financial development and educational quality in Sub-Saharan Africa

Figures & data

Table 1. Summary statistics and data sources

Variable	Obs.	Mean	Std. Dev.	Min	Max	Source
Financial Development	1260	0.13	0.102	0	0.646	IMF (2022)
Financial Institutions	1260	0.211	0.128	0	0.74	IMF (2022)
Financial Markets	1260	0.046	0.089	0	0.546	IMF (2022)
Financial Institutions-depth	1260	0.106	0.162	0	0.885	IMF (2022)
Financial Institutions- access	1260	0.087	0.136	0	0.902	IMF (2022)
Financial Institutions-efficiency	1260	0.508	0.164	0	0.987	IMF (2022)
Financial Markets depth	1260	0.06	0.11	0	0.822	IMF (2022)
Financial Markets access	1260	0.044	0.136	0	0.927	IMF (2022)
Financial Market efficiency	1260	0.029	0.116	0	1	IMF (2022)
Financial access	1260	0.079	1.058	−0.602	6.435	Author Computed
Financial depth	1260	0.039	1.085	−0.553	7.556	Author Computed
Financial efficiency	1260	0.058	1.157	−0.229	9.743	Author Computed
Pupil-teach ratio_ primary	902	42.481	13.846	12.467	100.237	World Bank (2022)
Pupil-teach ratio_ secondary	517	25.115	9.528	5.314	80.052	World Bank (2022)
Pupil-teach ratio_ tertiary	420	18.714	11.704	1.563	147.56	World Bank (2022)
Public Education Expenditure	729	4.088	1.973	0.623	13.22	World Bank (2022)
Under—5 Mortality Rate	1260	110.377	56.657	13.7	341.2	World Bank (2022)
Per Capita Income	1228	1758.553	2835.275	102.598	22,942.609	World Bank (2022)
Remittances	1094	4.022	12.15	0	167.432	World Bank (2022)

Source: Author’s computations from IMF and World Bank Data

Table 2. Correlation matrix

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
(1) Fin. Dev.	1.000
(2) Fin. access	0.699	1.000
(3) Fin. depth	0.782	0.419	1.000
(4) Fin. efficiency	0.694	0.334	0.421	1.000
(5) Public Edu. Exp	0.414	0.319	0.210	0.345	1.000
(6) Under-5 Mortality	−0.463	−0.625	−0.275	−0.213	−0.329	1.000
(7) Remittances	−0.065	−0.031	−0.130	−0.079	0.360	−0.048	1.000
(8) Per Capita Income (ln)	0.703	0.759	0.495	0.364	0.286	−0.650	−0.078	1.000

Source: Author’s computations from IMF and World Bank Data using Eviews software

Table 3. Unit root test results

Variable	Levels		First difference		Decision
	Statistic	p-value	Statistic	p-value
Financial Development	−2.23569	0.0127	Stationary at Levels		I (0)
Financial Access	8.98105	1.0000	−8.01564	0.0000	I (1)
Financial Depth	0.46447	0.6788	−13.9836	0.0000	I (1)
Financial Efficiency	−2.11182	0.0174	Stationary at Levels		I (0)
Pupil-teacher ratio_ primary	0.65351	0.7433	−8.37082	0.0000	I (1)
Pupil-teacher ratio_ second.	1.63801	0.9493	−5.41934	0.0000	I (1)
Pupil-teacher ratio_ tertiary	−1.94022	0.0262	Stationary at Levels		I (0)
Public Education Financing	0.21743	0.5861	−7.87719	0.0000	I (1)
Under—5 Mortality Rate	−8.16197	0.0000	Stationary at Levels		I (0)
Remittances	−2.33294	0.0098	Stationary at Levels		I (0)
Per Capita Income	4.40687	1.0000	−16.0926	0.0000	I (1)

Source: Author’s computations from IMF and World Bank Data

Table 4. Effect of financial development and public education financing on educational quality

Variables	Dep Var: pupil—teacher ratio at primary				Dep Var: Pupil—teacher ratio at secondary				Dep Var: pupil—teacher ratio at tertiary
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
L. dependent	0.925***	0.764***	0.583***	0.637***	0.66***	0.769***	0.892***	0.851***	0.632***	0.592***	0.64***	0.646***
	(0.033)	(0.04)	(0.072)	(0.059)	(0.115)	(0.02)	(0.026)	(0.015)	(0.078)	(0.08)	(0.076)	(0.069)
Overall Fin. dev	−1.468**				−10.036**				−4.448
	(0.685)				(4.278)				(5.866)
Fin. access		−0.888***				−0.208***				−1.228**
		(0.143)				(0.069)				(0.472)
Fin. depth			−0.564***				−0.25***				−0.217
			(0.131)				(0.057)				(0.635)
Fin. efficiency				−0.809***				−0.336***				−0.389***
				(0.246)				(.0064)				(0.137)
Pub Edu. Fin.	−0.082*	−0.086	−0.208**	−0.172*	0.144**	0.138***	−0.027	0.028	−0.468***	−0.569***	−0.531***	−0.669***
	(0.046)	(0.065)	(0.094)	(0.085)	(0.068)	(0.038)	(0.046)	(0.027)	(0.12)	(0.114)	(0.118)	(0.133)
Per Capita Inc. (ln)	−.495**	−.899***	−3.685***	−3.231***	−2.136***	−.786***	−0.66***	−.799***	−0.129	0.808	−0.3	−0.369
	(0.203)	(0.232)	(0.732)	(0.622)	(0.744)	(0.084)	(0.159)	(0.085)	(0.477)	(0.599)	(0.31)	(0.268)
Remittances	−.013***	−0.009	−0.032	−0.006	−0.026**	−0.021***	0.008	−0.004	0.002	0.009	0.007	0.022**
	(0.004)	(0.008)	(0.033)	(0.025)	(0.011)	(0.004)	(0.006)	(0.003)	(0.011)	(0.011)	(0.011)	(0.01)
Under-5 mortality	0.001	−0.002	0.008	0.003	0.008***	0.004***	0.005***	0.003***	−0.015*	−0.023***	−0.015*	−0.013*
	(0.003)	(0.002)	(0.012)	(0.01)	(0.002)	(0.001)	(0)	(0)	(0.007)	(0.007)	(0.009)	(0.007)
Constant	5.889**	16.322***	42.09***	36.962***	20.266***	10.448***	6.832***	8.849***	11.896***	7.156*	12.535***	13.286***
	(2.703)	(3.355)	(7.755)	(6.645)	(7.073)	(0.681)	(1.693)	(0.916)	(3.177)	(3.771)	(2.656)	(2.516)
Observations	380	380	380	380	211	211	211	211	151	151	151	151
Countries	35	35	35	35	33	33	33	33	32	32	32	32
Instruments	33	33	27	32	24	32	28	33	18	18	18	18
AR (1)	0.005	0.008	0.013	0.009	0.019	0.018	0.013	0.016	0.046	0.054	0.045	0.043
AR (2)	0.832	0.779	0.720	0.687	0.467	0.478	0.471	0.491	0.430	0.473	0.421	0.429
Hansen	0.485	0.297	0.227	0.514	0.231	0.380	0.476	0.422	0.281	0.274	0.278	0.233

Source: Author’s computation; ***, **, and * show significance at 1%, 5%, and 10% respectively, corrected standard errors in parenthesis

Table 5. Interaction effect of public education financing and financial development on educational quality

Variables	Dep. Var.: pupil—teacher ratio at primary				Dep. Var.: pupil—teacher ratio at secondary				Dep. Var.: pupil—teacher ratio at tertiary
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
L. Dependent	0.9***	0.769***	0.58***	0.636***	0.656***	0.763***	0.89***	0.841***	0.693***	0.602***	0.701***	0.632***
	(0.037)	(0.037)	(0.071)	(0.058)	(0.114)	(0.019)	(0.023)	(0.016)	(0.074)	(0.08)	(0.068)	(0.081)
Pub. Edu. Fin.	−0.054	−0.097	−0.216**	−0.163*	0.226	0.152***	−0.011	0.026	−0.851***	−0.614***	−0.511***	−0.766***
	(0.099)	(0.06)	(0.096)	(0.091)	(0.137)	(0.038)	(0.047)	(0.039)	(0.18)	(0.127)	(0.11)	(0.221)
Fin. Dev.	−5.344***				−12.603**				−28.653***
	(2.351)				(4.643)				(10.356)
Pub. Edu. × Fin. Dev	−0.738				−0.487				−3.03***
	(0.591)				(0.576)				(0.92)
Financial Access		−0.471				0.01				−1.737***
		(0.459)				(0.125)				(0.516)
Pub. Edu. × Fin. Access		−0.085				−0.048***				−0.115
		(0.084)				(0.014)				(0.104)
Financial Depth			1.062*				−1.021***				−2.257***
			(0.611)				(0.213)				(0.683)
Pub. Edu. × Fin. Depth			−0.093				−0.145***				−0.461***
			(0.098)				(0.037)				(0.119)
Financial Efficiency				0.257				0.829				−3.688**
				(1.379)				(0.989)				(1.795)
Pub. Edu. × Fin. Effici.				0.108				−0.091				−0.328**
				(0.245)				(0.183)				(0.166)
Per Capita Income (ln)	−0.622**	−0.854***	−3.747***	−3.249***	−2.163***	−0.811***	−0.753***	−0.824***	0.403	0.826	−0.184	−0.407
	(0.237)	(0.221)	(0.747)	(0.624)	(0.733)	(0.096)	(0.153)	(0.086)	(0.413)	(0.575)	(0.272)	(0.281)
Remittances	−0.011*	−0.009	−0.034	−0.006	−0.028**	−0.024***	0.001	−0.007**	0.013	0.017	0.032**	0.025**
	(0.006)	(0.008)	(0.034)	(0.027)	(0.012)	(0.004)	(0.006)	(0.003)	(0.011)	(0.014)	(0.013)	(0.011)
Under-5 Mortality	0.001	−0.002	0.008	0.003	0.009***	0.004***	0.005***	0.004***	−0.014**	−0.022***	−0.01	−0.014*
	(0.003)	(0.002)	(0.012)	(0.01)	(0.002)	(0.001)	(0)	(0)	(0.007)	(0.007)	(0.007)	(0.007)
Constant	8.384**	15.935***	42.653***	37.114***	20.09***	10.71***	7.491***	9.267***	10.039***	6.793*	9.811***	14.636***
	(3.209)	(3.127)	(7.833)	(6.644)	(7.081)	(0.724)	(1.567)	(.81)	(2.885)	(3.54)	(2.218)	(3.524)
Observations	380	380	380	380	211	211	211	211	151	151	151	151
Countries	35	35	35	35	33	33	33	33	32	32	32	32
Instruments	34	34	28	33	25	33	29	34	19	19	19	19
AR (1)	0.005	0.008	0.013	0.009	0.097	0.018	0.014	0.017	0.046	0.052	0.041	0.046
AR (2)	0.814	0.755	0.696	0.681	0.473	0.482	0.447	0.489	0.424	0.477	0.432	0.443
Hanse Test	0.477	0.327	0.225	0.500	0.241	0.384	0.503	0.461	0.265	0.272	0.281	0.173

Source: Author’s computation; ***, **, and * show significance at 1%, 5%, and 10% respectively, standard errors in parenthesis