*2.1. Data Description*

The study uses annual data<sup>1</sup> of West African countries for the 1980–2014 period. The countries include Benin, Burkina Faso, Cape Verde, Cote D' Ivoire, Gambia, Ghana, Liberia, Guinea, Guinea Bissau, Mali, Mauritania, Niger, Nigeria, Sierra Leone, Senegal and Togo. The estimation period is limited because of the unavailability of data for some West African countries prior to this period. The data on economic growth, credit to the private sector, governmen<sup>t</sup> consumption expenditure and trade openness were sourced from the World Development Indicators (2016) of the World Bank, while the data for the inflation rate were obtained from the World Economic Outlook (2015) of the International Monetary Fund. In addition, the data for the liquid liabilities were sourced from

<sup>1</sup> We attempt to use different frequency data such as quarterly or monthly data to check the robustness of our annual data; unfortunately, the quarterly or monthly data for all variables in our model are unavailable for the sample period. When the quarterly or monthly data become readily available in the future, further research could utilize them for comparison.

the Economic Data (2016) of the Federal Reserve Bank of St Louis, USA, while the data on human capital were taken from the Human Development Reports (2015) of the United Nations Development Programme. Data on the real exchange rate were computed from an official nominal exchange rate and consumer price index drawn from World Development Indicators (2016), while real exchange rate volatility was computed as the standard deviation of the 5-year moving average of the logarithm of the real exchange rate.

Figure 1 shows the trend analysis of average GDP per capita, financial development indicators and the real exchange rate of the West African region during the 1980–2014 period. It is obvious that financial development indicators were low and experienced no remarkable increase during the period. Although the level of GDP was high relative to the levels of both financial development and real exchange rate, but there was only a marginal increase in the level of GDP during the period. Conversely, the graph shows a significant increase in the real exchange rate in the West African region during the period. These remarkable changes in the real exchange rate could have both direct and indirect effects on economic growth via the financial sector.

**Figure 1.** Trends analysis of GDP, financial development and real exchange rate in the West African region.
