DOI: 10.12688/f1000research.185784.1 ISSN: 2046-1402

Financial Architecture, Government Effectiveness and Carbon Emission Risk in Foreign Capital Mobilization in Sub-Saharan Africa

Md Qamruzzaman, Abdulateif A. Almulhim, Abdullah A. Aljughaiman
Show PDF Cite
Background Sub-Saharan Africa faces a persistent external-finance constraint that limits investment, employment, technology transfer and progress toward sustainable development. This study examines whether financial inclusion, financial efficiency, government effectiveness and carbon emissions shape foreign capital mobilization through FDI and remittance inflows. Methods Annual data for 44 Sub-Saharan African economies from 2004 to 2022 were analysed using a sequential panel design. Cross-sectional dependence, slope heterogeneity, CADF/CIPS unit-root and Westerlund cointegration tests guided the empirical strategy. CS-ARDL served as the main estimator, with CCEMG, AMG, System GMM, panel quantile regression and Dumitrescu-Hurlin causality used for robustness, endogeneity, distributional and direction-of-association checks. Results Financial inclusion, financial efficiency and government effectiveness increase both FDI and remittance inflows in the long run. Carbon emissions show an inverted-U relationship with FDI and a negative association with remittances. Human capital, trade openness and income reinforce foreign capital mobilization, while globalization has a stronger positive effect on FDI than on remittances. Conclusions Foreign capital mobilization in Sub-Saharan Africa requires more than market size and openness. Policies should expand financial access, improve intermediation quality, strengthen government credibility and align investment promotion with decarbonization.

More from our Archive