Rethinking the role of financial sector development in the foreign direct investment-economic growth nexus: Evidence from Ghana using the sample splitting approach

The overarching aim of this study is to determine the extent to which financial development influences the impact of foreign direct investment inflows on growth, relying on annual time series data spanning from 1970 to 2020 from Ghana. Results from the sample splitting approach reveal that FDI generally affects growth. Interestingly, the study shows that financial development influence on the FDI -growth nexus is ambiguous. However, we notice that higher financial development is mainly associated with a beneficial effect of FDI on growth. Thus, the precise nature of how financial development mediates the FDI -growth nexus is conditioned on the model specification.