FDI And Economic Growth Relationship In Sub-Saharan Africa: Is The Domestic Financial System A Significant Intermediator?

Olagbaju, Ifeolu Oladiran; Akinlo, Anthony Enisan

doi:10.14738/abr.65.4540

Cited by 20 publications

(10 citation statements)

References 28 publications

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“…Consistent with the earlier studies (Ehigiamusoe et al, 2019; Gazdar & Cherif, 2015; Hermes & Lensink, 2003; Moradbeigi & Law, 2017; Olagbaju & Akinlo, 2018; Olaniyi & Adedokun, 2020; Olaniyi & Oladeji, 2020; Saidi, 2020), the interactive term in Equation ) gives room to examine the moderating role of institutional quality in influencing the role of financial development in economic growth process of Kenya. From Equation ), the marginal benefits of financial development on growth is determined by finding the partial derivative of the Equation with respect to financial development as follows

\frac{\partial {rgdpc}_{t}}{\partial {fd}_{t}} = δ_{2} + δ_{4} {inst}_{t}

…”

Section: Methodssupporting

confidence: 70%

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Olaniyi

Oladeji

2020

Journal of Public Affairs

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In line with the recent assertion that institutional quality matters in the way financial development influences economic growth in financial economics literature, this study examines the moderating role of institutional quality in the finance‐growth nexus in Kenya for the period 1986–2015. A fully modified ordinary least square (FMOLS) estimator is adopted to take care of endogeneity problem inherent in the relationship among the variables while error‐correction version of autoregressive distributed lag (ARDL) technique is adopted to take care of short‐ and long‐run effects. The research outputs reveal that in the short‐run institutions and finance complement and reinforce each other to enhance growth, while institutional framework in Kenya constitutes a drain that leaks out the growth benefits of financial development in the long run. It is also found that the country majorly operates below the threshold level of institutional quality required to maximize the growth benefits of financial development. This study, therefore, concludes that institutional framework guiding the operations of financial system in Kenya should be strengthened so as to block loopholes and lapses that leak out the growth benefits of finance.JEL CLASSIFICATIOND53; E02; N27; O43

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\frac{\partial {rgdpc}_{t}}{\partial {fd}_{t}} = δ_{2} + δ_{4} {inst}_{t}

…”

Section: Methodssupporting

confidence: 70%

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Olaniyi

Oladeji

2020

Journal of Public Affairs

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“…The path-breaking Harrod-Domar model (1939, 1946 remains the fundamental reference in the economics of investment, and it highlights the significance of determining the rate of investment, needed to achieve a certain rate of economic growth (Evans, 2018). In the same vein, the role of foreign investment (in the form of FDI) in economic growth has been recognized as key in the literature (See Gunby, Jin and Reed, 2017;Olagbaju and Akinlo, 2018;Bunte et al, 2018;Sharma, Rishad and Gupta, 2018). However, this role of FDI in economic growth is highly controversial.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effects of Foreign Direct Investment, Trade, Aid, Remittances and Tourism on Welfare under Terrorism and Militancy

Evans¹,

Kelikume²

2018

International Journal of Management, Economics and Social Sciences

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The purpose of this study was to determine the effects of Foreign Direct Investment (FDI), trade, aid, remittances and tourism on welfare under terrorism and militancy. Using Nigeria as a case study for the period from 1980 to 2016, this study utilized autoregressive distributed lag (ARDL) bounds testing approach and the Cobb-Douglas production function. The empirical findings showed that, in the short-run, FDI, trade, aid, remittances and tourism had positive significant effects on welfare, even under terrorism and militancy. However, in the long run, only aid and remittances had significant effects while FDI, trade and tourism were insignificant. In other words, FDI, trade and tourist inflows were repressed as a result of the presence of terrorism and militancy in the long-run, meaning that they could not thrive in tensed and insecure environments. Surprisingly, despite the presence of militancy and terrorism, in the long-run, aid and remittances still had significant effects on welfare. The findings also showed that terrorism and militancy had significant negative effects on welfare both in the short and long run. In conclusion, terrorism and militancy not only undermined FDI, trade and tourism, but also led to a significant decline in welfare.

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“…Olagbaju and Akinlo (2018), for example, found that FDI can be growth-enhancing for Sub-Saharan Africa (SSA) countries only if there is a developed financial system. They also demonstrated that the causal relationship between financial system development and FDI is stronger for low-income countries as compared to middle-income countries in SSA.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

Effect of capital flows on financial stability in middle-income countries

Ebire

Ullah

Adeleye

et al. 2021

JFRC

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Purpose This study aims to examine the effect of various forms of capital flows on financial stability in middle-income countries from 2010 to 2017 using the World Bank economy classifications of 121 economies. Design/methodology/approach Panel spatial correlation consistent approach was used in this study. Findings The findings provide convincing evidence that in middle-income countries, capital flows are positive and significant predictors of financial stability and that financial systems in advanced economies are more stable than those of emerging and developing countries. However, outward foreign direct investments are shown to have the largest potential for ensuring financial stability. Originality/value Globalization has fostered financial integration of nations, which is manifested in capital flows from lower-income countries to middle-income and upper-income countries and vice versa. These flows can lead to financial instability if not properly controlled. The authors show how the various forms of capital flows affect the financial stability in middle-income countries.

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FDI And Economic Growth Relationship In Sub-Saharan Africa: Is The Domestic Financial System A Significant Intermediator?

Cited by 20 publications

References 28 publications

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Interplay between financial sector and institutional framework in the economic growth process of Kenya

The Effects of Foreign Direct Investment, Trade, Aid, Remittances and Tourism on Welfare under Terrorism and Militancy

Effect of capital flows on financial stability in middle-income countries

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