Does Financial Constraints Impede Growth Convergence? Evidence From ECOWAS

The paper examines the hypothesis that financial constraints can impede convergence in growth rates. Using a Schumperetian growth model that incorporates innovations and financial constraints, the paper was able to put forward plausible effects of financial constraints on growth convergence in ECOWAS member countries. Employing a panel regression, the paper found that financial constraints which are present in countries with a less developed financial sector can impede growth convergence. This finding is robust when policy control variables – government size, inflation, trade openness - were included in the model