Crowding Out of Private Sector in Tanzania: Government Expenditure, Domestic Borrowing, and Lending Rates

Mwakalila, Enock

doi:10.1177/2394901520913653

Cited by 13 publications

(9 citation statements)

References 12 publications

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“…When the government takes up substantial loans amounts, this in turn occasions increases in real interest rates, adversely impacting an economy's lending capacity, thereby disincentivizing enterprises from investing in long term capital projects that would have been done with borrowed funds given the increases in interest rates, which makes viable projects that would have been funded by borrowed monies extremely expensive, therefore unprofitable (Fincke & Greiner, 2015). The argument being that as the cost of borrowing escalates, there's a reduction in interest-sensitive1spending1like investments and consumption, and in this way, and public sector's borrowing "crowds out" investment (Mwakalila, 2020).…”

Section: The Crowding-out Effect Theorymentioning

confidence: 99%

The Effect of National Public Debt on Economic Growth in Kenya

Hassan

Ongeri²,

Ndolo³

2023

ESJ

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Kenya being a lowermiddle income country compliments tax revenue with government borrowing to finance its national development plans. In an attempt to add to available domestic resources, successive governments have relied on both domestic and external debt to finance the country’s budget.In light of the growing concerns over Kenya’s national public debt sustainability and its potential effect on the economy, this study aimed at analyzing the effect of national public debt on economic growth in Kenya. Specifically, the study sught to establish the effect of domestic debt and external debt on Kenya’s economic growth. Gross Domestic Product was used as the proxy for economic growth while domestic debt, external debt, inflation rate, exchange rate, capital stock and labor force are the explanatory variables. The study used time series data for the period 990 to 209. The data was extracted from the World development indicators and this data was harmonized with data extracted from the data bases of the Kenya National Bureau of Statistics. The data was analyzed through the Ordinary Least Square (OLS) regression technique. The findings indicated that domestic debt had an insignificant negative effect on Kenyan economy while external debt has insignificant positive effect. The study concluded that internal debt has deleterious while external debt has positive effect on growth.

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Section: The Crowding-out Effect Theorymentioning

confidence: 99%

The Effect of National Public Debt on Economic Growth in Kenya

Hassan

Ongeri²,

Ndolo³

2023

ESJ

View full text Add to dashboard Cite

show abstract

“…When the government takes up substantial loans amounts, this in turn occasions increases in real interest rates, adversely impacting an economy's lending capacity, thereby disincentivizing enterprises from investing in long-term capital projects that would have been done with borrowed funds given the increases in interest rates, which makes viable projects that would have been funded by borrowed monies extremely expensive, therefore unprofitable (Fincke & Greiner, 2015). The argument is that as the cost of borrowing escalates, there's a reduction in interest-sensitive1spending1like investments and consumption, and in this way, and public sector's borrowing "crowds out" investment (Mwakalila, 2020).…”

Section: The Crowding-out Effect Theorymentioning

confidence: 99%

The Effect of National Public Debt on Economic Growth in Kenya

Hassan

Ongeri

Ndolo

2023

ESJ

View full text Add to dashboard Cite

Kenya being a lower middle income country compliments tax revenue with government borrowing to finance its national development plans. In an attempt to add to available domestic resources, successive governments have relied on both domestic and external debt to finance the country’s budget. In light of the growing concerns over Kenya’s national public debt sustainability and its potential effect on the economy, this study aimed at analyzing the effect of national public debt on economic growth in Kenya. Specifically, the study sught to establish the effect of domestic debt and external debt on Kenya’s economic growth. Gross Domestic Product was used as the proxy for economic growth while domestic debt, external debt, inflation rate, exchange rate, capital stock and labor force are the explanatory variables. The study used time series data for the period 990 to 20 9. The data was extracted from the World development indicators and this data was harmonized with data extracted from the data bases of the Kenya National Bureau of Statistics. The data was analyzed through the Ordinary Least Square (OLS) regression technique. The findings indicated that domestic debt had an insignificant negative effect on Kenyan economy while external debt has insignificant positive effect. The study concluded that internal debt has deleterious while external debt has positive effect on growth.

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“…For example, if government decides to sell treasury bills to the public in order to enhance its financial position, this singular act will tend to reduce moneys available for entrepreneurs and businesses to fall on. Such policies if proceeded more often and at more competitive rates, investors would prefer offering finance to government at the expense of the private sector and this would invariably crowd out the private sector and all entrepreneurial activities (Mwakalila, 2020).…”

Section: External Factors As "Hindrance"mentioning

confidence: 99%

On the question of entrepreneurial breakthrough or failure in Africa: a framework for analysis

Yeboah‐Assiamah

Hossain

Mamman

et al. 2023

AJEMS

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PurposeHaving the right intent, aspiration, ability and attitude to become an entrepreneur has become the mantra in the extant literature to be driver of entrepreneurship and small and medium enterprise (SME) growth. Why would zealous and ambitious individuals with all rightful attributes so required of entrepreneurs have to fizzle out few years after venturing into business or SMEs? Perhaps these same individuals may relocate to other jurisdictions and would establish successful firms even beyond their imaginations. Beyond the individual’s entrepreneurial attributes, there are other external countervailing forces which either “enable” or “impede” entrepreneurial drive and SME growth processes. Adopting the theory of planned behavior, this study conceptualizes a systems framework to analyze how SMEs either flourish or fail in developing countries.Design/methodology/approachThe study relies on secondary sources of data. It adopts a critical stage review of secondary data.FindingsThe study argues that the interplay of “internal factors” and “external factors” of prospective entrepreneurs provides a useful framework to explain the general SME outlook of an economy. The study postulates that many internally driven prospective SME entrants (with entrepreneurial attitudes, abilities and aspirations) mostly in the developing economies may have their dreams shattered because of obstructive external ecological elements which tend to frustrate new business entrants as well as existing ones.Originality/valueWith the aid of a framework, this study conceptualizes a comprehensive framework to analyze how SMEs either flourish or fail in developing countries.

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Crowding Out of Private Sector in Tanzania: Government Expenditure, Domestic Borrowing, and Lending Rates

Cited by 13 publications

References 12 publications

The Effect of National Public Debt on Economic Growth in Kenya

The Effect of National Public Debt on Economic Growth in Kenya

The Effect of National Public Debt on Economic Growth in Kenya

On the question of entrepreneurial breakthrough or failure in Africa: a framework for analysis

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