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ORIGINAL ARTICLE
Moderating analysis of financial policy, real interest rate and economic performance in Middle East & North Africa and Sub-Saharan Africa Countries
1
Accountancy, Nnamdi Azikiwe University, Nigeria
2
Accounting and Finance, Kemmy Business School, University of Limerick, Ireland, United Kingdom
3
Accounting, Chukwuemeka Odumegwu Ojukwu University, Igbariam, Anambra State. Nigeria, Nigeria
4
Oil and Gas Accounting, ANAN University, Nigeria, Nigeria
Submission date: 2024-11-15
Final revision date: 2025-02-23
Acceptance date: 2025-02-27
Online publication date: 2025-04-09
Publication date: 2025-04-09
Economic and Regional Studies 2025;18(1):15-33
KEYWORDS
JEL CLASSIFICATION CODES
G18; E43; O47
TOPICS
ABSTRACT
Subject and purpose of work: This study investigates the interplay between financial policy and real interest rates and their impact on economic performance in MENA and SSA countries. It aims to determine whether financial policy supports economic performance and how its interaction with real interest rates amplifies or moderates its effect. Materials and methods: The research applies both static (Pooled OLS and Fixed Effects) and dynamic systems GMM estimation techniques on a panel dataset of 70 countries across 21 years (2000–2020). Results: Results indicate that domestic credit to the private sector by banks positively contributes to economic performance, with real interest rates intensifying this effect. However, real interest rates, when combined with domestic credit, show both positive and negative net effects on economic performance, especially in financially constrained economies with low and negative real interest rates. Conclusions: Notably, thresholds for real interest rates—such as 5.5%—are identified, above which the net impact on economic performance can shift from negative to positive.
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