Purpose The purpose of this study is to empirically weigh the evidence for financial depth, liquidity and efficiency role to economic growth, and test for the existence of cointegration between financial development variables and economic growth in Tanzania. Design/methodology/approach The study used the autoregressive distributed lag model with bound testing procedures. The sample covered yearly time-series data from 1980 to 2017, i.e. 38 years. Findings The results suggest that financial system depth is positively related to economic growth in the short run and that financial system liquidity and efficiency is strongly negatively associated with economic growth both in the short and long run. Further, it is found that financial development is cointegrated with economic growth. Thus, financial reforms and liberalisation have not fully brought the desired positive effects on economic growth yet. Originality/value The study uses principal component analysis to capture specific dimensions within the financial system as an intuitive way to aggregate financial development effects. Unlike studies that included several countries with heterogeneous characteristics, which are sometimes difficulty to homogenise, in recognition of countries’ unique experiences, this study uses data from Tanzania as a specific case. It documents pertinent pieces of evidence for a developing economy necessary for financial policy adjustments post the financial and economic liberalisation and reforms period. It nevertheless sheds light on financial policies for other comparable developing economies during and after both financial and economic liberalisation settings.

Purpose The purpose of this paper is to contribute to empirical evidence by recognizing the importance of stock markets in the financial system and consequently its causality to economic growth and vice versa. Design/methodology/approach The study used the autoregressive distribute lag model (ARDL) with bound testing procedures, the sample covered quarterly time-series data from 2001q1 to 2019q2 in Tanzania. Findings The results suggest that stock market development have both negative and positive causality for both short-run dynamics and long-run relationship with economic growth. Economic growth is found to only cause and relate negatively to liquidity both in the short-run and in the long-run. The results show predominantly a unidirectional causality flow from stock market development to economic growth and finds partial causality flow from economic growth to stock market development, as represented by stock market turnover which proxied liquidity. Originality/value The use of quarterly data to reflect more realistically the dynamics of the variables because yearly data may sometimes cover-up specific dynamics that may be useful for prediction and policy planning. The study uses indices to capture general aspects within the stock market against economic growth as an intuitive way to aggregate the stock market development effects.

The study analyzed effects of bank-specific, industry-specific and macroeconomic determinants on banks profitability. It used a maximum of 350 firm-years, from 52 banks from 1998 to 2010 in Tanzania. It did proxy profitability using return on asset (ROA), return on equity (ROE) and net interest margin (NIM). The static fixed effects regression model indicated that; credit facilities (CFA), capital adequacy (TEA), credit risk (CFR), diversification ratio (DIV), bank risk (BAR) and financial market development (MCAd) were significantly influencing ROA. The dynamic fixed effects regression model indicated that lagged ROA, TEA, loan losses provisions (PLT) and BAR, were significantly influencing ROA.

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This paper gears towards expounding the role, capacity, suitability, challenges and solutions for African financial systems in enhancing economic growth. This article employs a quasi-meta-analysis method of literature where an online search of materials related to the field of financial system and economic development were visited. Several journal publishers were included in finding the materials for this review. Search words and synonyms were used in the search processes, the reviewed papers were used in discussing the related issues in the topic. It shows that, both theoretically and empirically, a financial system in an economy facilitates the following roles: first, it enables transfer of resources through time, across borders and among economic entities. Second, it facilitates mobilization and pooling of savings. Third, it facilitates the allocation of capital competitively. The reviewed evidences show that, Africa's financial systems have this functionality potential if there will be among others; liberalization of economies, strengthening of legal framework and expansion of tax and investor bases. The African situation needs to seek innovative financial products such as Islamic bonds, sovereign bonds and diaspora bonds. Empower local/municipal governments' role in raising finance through municipal bonds. Discharge differential financial policies to suit characteristics of the African populations. Implement agenda on ICT, information sharing, and sensitization on savings and promote financial inclusion at all levels of financial intermediation. This article attempts to deduce from empirical evidences specific implications and link them to both policy and practical realities for the linkage between financial development and economic development in the African experiences. No prior article has attempted to look at this issue in this light within the African context.