Policy Effect of Financial Deepening on Economic Augmentation in Ghana: A Co-Integration Analysis

Following the deterioration of the Ghanaian economy in 1983, the nation struggled with employment, food insecurity, and other travails. The Ghanaian government introduced the Structural Adjustment Program (SAP) as part of economic recovery program. The economy went through several economic reforms such as: Financial Sector Adjustment Program (FINSAP) in 2003.  The FINSAP in its operation, set-up a Strategic Plan for development and augmentation known as Financial Sector Strategic Plan (FINSSP) in 2003 to ascertain economic augmentation (i.e. growth). In view of that, the study sought to find out whether these reforms have facilitated economic growth and development in Ghana. The study followed Johanson co-integration regression procedures with a sample size of 31 from a time series annual data between 1983 -2013. The study found out that financial deepening has a significant impact on economic growth in Ghana as far as the study period is concerned. The study therefore recommended that authorities must put in place a stringent measures and mechanisms in order to remove any unnecessary restriction in the financial sector for the sector to grow which will in effect brings entire growth and development to the nation. Keywords: Co-integration, Financial Deepening, Financial market, Economic Growth and Development.