Comparative Governance Quality's Impact on Monetary Policy, Saving, and Economic Growth Dynamics: Empirical Evidence From Nigeria, Egypt and South Africa

ABSTRACT Our study examines the comparative impact of governance quality on the dynamic relationship between monetary policy rate, saving, and economic growth in emerging economies in sub‐Saharan African countries from 2005Q1 to 2022Q4. Using the Toda‐Yamamoto (TY) model, we found that governance quality influence on monetary policy rate is negative with adverse effect on investment‐growth while exerting positive influence on savings‐growth nexus in Nigeria but the contribution is quite appreciative and can be leverage on. Governance quality exert negative influence on monetary policy rate but with positive direction from investment and savings to growth in Egypt. The magnitude of the monetary policy rate, savings, investment is quite negligible in Egypt. For South Africa, governance quality exerts positive influence on monetary policy rate but failed to translate to positive effect on investment, savings to growth in South Africa. Although, the contribution of monetary policy rate, savings, investment to growth is significant in South Africa. Thus, enhancing institutional development to foster a more effective financial incentive system and seamless policy transmission is crucial to address the impact of governance quality on monetary policy outcomes and enable better macroeconomic interactions.