Financial development and economic growth in sub-Saharan Africa: A sectoral perspective

Ustarz, Yazidu; Fanta, Ashenafi Beyene

doi:10.1080/23322039.2021.1934976

Cited by 38 publications

(28 citation statements)

References 78 publications

(106 reference statements)

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“…The models are estimated using the GMM regression methods. The GMM regression technique we use in this paper has been used in previous studies such as Rachdi and Mbarek (2011), Ozili et al (2022a), Ibrahim and Alagidede (2018), Ozili (2021) and Ustarz and Fanta (2021). The GMM model has one lag while the instruments are the first-difference of the variables.…”

Section: Model Specificationmentioning

confidence: 99%

Effect of abnormal increase in credit supply on economic growth in Nigeria

Ozili¹,

Oladipo

Iorember

2023

AJEMS

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PurposeThis paper investigates the effect of abnormal increase in credit supply on economic growth in Nigeria after controlling for the quality of the legal system, size of central bank asset, banking sector cost efficiency and bank insolvency risk.Design/methodology/approachThe authors employ the generalised method of moments (GMM) regression methodology to estimate the effect of abnormal increase in credit supply on two measures of economic growth in Nigeria.FindingsThe abnormal increase in credit supply has a significant effect on economic growth. Abnormal increase in credit supply increases real gross domestic product (GDP) growth. The abnormal increase in credit supply decreases real GDP per capita during the global financial crisis. The abnormal increase in domestic credit to the private sector has a significant positive effect on GDP per capita when there is strong legal system quality in Nigeria. In contrast, the abnormal increase in domestic credit to the private sector has a significant negative effect on real GDP growth when there is strong legal system quality in Nigeria.Practical implicationsThe abnormal increase in credit supply is ineffective in increasing GDP per capita during crisis years. Policymakers should be cautious in pressuring financial institutions to release an abnormally large amount of credit into the economy particularly during financial crises. Rather, policymakers should encourage financial institutions to supply credit in a sustained manner – not in an abnormal manner –and in a way that supports growth.Originality/valueThe present study contributes to the literature by analysing the effect of abnormal increase in credit supply on economic growth in a developing country context.

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Section: Model Specificationmentioning

confidence: 99%

Effect of abnormal increase in credit supply on economic growth in Nigeria

Ozili¹,

Oladipo

Iorember

2023

AJEMS

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“…For example, Beck and Levine (2004) among other studies found evidence in support of positive effect of financial development on economic growth. Ustarz and Fanta (2021) employed data from SSA to study the nexus between finance and economic growth. They found positive effect of finance on Notwithstanding the vast amount of literature in support of the positive effect of financial development on economic growth, some strand of literature provides evidence on the contrary.…”

Section: Literature Reviewmentioning

confidence: 99%

Islamic banking and economic growth: fresh insights from Nigeria using autoregressive distributed lags (ARDL) approach

Tabash

Abdulkarim²,

Akinlaso³

et al. 2022

AJEMS

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PurposeThe paper examines the relationship between Islamic banking and the growth of the economy in Nigeria in both the short run and long run.Design/methodology/approachThe study employs quarterly secondary time series data for Islamic banking as well as major macroeconomic variables to study the contribution of Islamic banking to the economy of Nigeria. It employs autoregressive distributed lags (ARDL) and error correction model (ECM) approaches from 2013 quarter 1 up to 2020 quarter 2.FindingsThe results show that Islamic banking has a positive contribution to Nigeria's economy in both short run and long run, but this contribution is insignificant.Practical implicationsPolicymakers should endeavor to redesign the country's financial architecture and come up with policies that can support the growth of Islamic finance sector. This will significantly strengthen Nigeria's position as one of the leading Islamic finance hubs in Africa.Originality/valueThis is the first study to examine the contribution of Islamic banking to the Nigerian economy according to the best knowledge of the authors.

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“…Wen et al (2021), in a panel study for 120 countries, applied the system GMM and found that nancial development exerts an adverse effect on GDP growth. Ustarz and Fanta (2021) From the above review, different studies have tried to identify the combinations of macroeconomic indicators crucial for long-term economic prosperity in various developing and emerging countries. In ation and exchange rates, de cit nancing, foreign investment, and nancial development have featured as dominant economic prosperity determinants.…”

Section: Empirical Reviewmentioning

confidence: 99%

Macroeconomic Factors and the Prospects of Economic Prosperity in a Developing Economy: Evidence from Dynamic ARDL Simulations

Aladejare¹

2022

Preprint

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This study investigated the effects of inflation and exchange rates, deficit financing, foreign investment, and financial development on economic prosperity measured by GDP per capita for Nigeria from 1970 to 2020. Empirical inferences were derived by applying the autoregressive distributed lag (ARDL), dynamic ARDL (DYNARDL), and the Kernel-based least squares (KRLS) models. It was observed that inflation rate and deficit financing adversely impacted economic wealth in the short and long term. At the same time, the exchange rate and financial development only benefited economic prosperity in the long term. In contrast, foreign investment was reported to be prosperity-decelerating in the long term. Applying the DYNARDL and KRLS techniques enabled the response of economic prosperity to future counterfactual shocks to the inflation and exchange rate variables. While inflationary shocks may have long-term beneficial effects on economic prosperity, shocks to the exchange rate will slightly erode these benefits. The study proposed several policy measures.JEL Classifications: E6, O11, O47.

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Financial development and economic growth in sub-Saharan Africa: A sectoral perspective

Cited by 38 publications

References 78 publications

Effect of abnormal increase in credit supply on economic growth in Nigeria

Effect of abnormal increase in credit supply on economic growth in Nigeria

Islamic banking and economic growth: fresh insights from Nigeria using autoregressive distributed lags (ARDL) approach

Macroeconomic Factors and the Prospects of Economic Prosperity in a Developing Economy: Evidence from Dynamic ARDL Simulations

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