Financial development and economic growth: evidence from southern African development community countries

Taivan, Ariuna; Nene, Gibson

doi:10.1353/jda.2016.0154

Cited by 29 publications

(28 citation statements)

References 27 publications

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“…They indicate that the following financial transmission channels: monetary policy, credit and expectation are essential in stimulating outputs and stabilising prices for positive economic growth. Similarly, Taivan and Nene (2016) studied the Southern Africa Development Community and found that domestic credits promote investments. Thus, they found that financial development caused economic growth in Mauritius, Namibia and South Africa.…”

Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 99%

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Kapaya

2020

AJEB

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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.

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Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 99%

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Kapaya

2020

AJEB

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“…Economic growth was proxied by real gross domestic product growth rate (RGDP) in order to control for inflation terms of the countries in the sample and obtain more superior estimations (Ariuna and Gibson, 2016;Altaee and Ai-Jafari, 2015;Arac and Ozcan, 2014).…”

Section: Data and Variable Descriptionmentioning

confidence: 99%

“…The use of finance as one of the tools for speeding up economic prosperity in the SADC region has been studied before (Bara et al 2017;Ariuna and Gibson, 2016;Akinboade and Kinfack, 2015;South Africa Reserve Bank, 2014). Interestingly, contemporary views have ushered in the new notion that financial inclusion ought to be part of financial development.…”

Section: Introductionmentioning

confidence: 99%

“…As the financial inclusion dimension is becoming a reality for an increasing number of developing countries, it is important to empirically examine how it affects economic growth as well as how domestic financial sector developments influence this process. Unlike previous studies in SADC countries such as Ariuna and Gibson (2016) and South Africa Reserve Bank (2014), the current study further investigates the causal relationship between financial inclusion and economic growth in SADC. It also contributes to the existing knowledge by identifying the inconsistency and inability of most empirical studies such as Asongu and Odhiambo (2020), Tchamyou et al (2019), Ahmad et al (2018), Naceur et al (2017), and Batuo et al (2018), which did not categorically differentiate between the effects of financial inclusion on macroeconomic variables based on the level of economic development.…”

Section: Introductionmentioning

confidence: 99%

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The Co-Integrating Relationship Between Financial Inclusion and Economic Growth in the Southern African Development Community

Chiwira¹

2021

EJEF

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This study examines the relationship between financial inclusion and economic growth in SADC. It uses panel data covering the period between 1995 to 2015 and employs the Autoregressive Distributed Lag (ARDL) Bounds and the Toda and Yamamoto and Dolado and Lutkepohl (TYDL) models to examine the co-integrating relationship and the direction of causality respectively. The impact of financial inclusion on economic growth, when measured by the mobile penetration rate and the number of bank branches, diminishes in the long run to an extent of having a negative relationship with economic growth. This implies possible thresholds beyond which a negative impact on economic growth is realized. The long-run influence of financial inclusion on economic growth is hinged on financial technologies, measured by fixed broadband internet services, which have great potential to foster unique financial inclusion and shift the economic paradigm, leading to a digitalized economy. Only financial inclusion initiatives that result in increased bank deposit accounts promote economic growth. SADC is encouraged to liberalize its information and communications technology sector in order to fully benefit from financial inclusion initiatives. In addition, SADC should consider embracing international financial monitoring standards so that it does not fall behind the inevitable integration of the financial sectors.

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“…Taivan and Nene concluded, after conducting an analysis on 10 countries from the Southern African Development Community for the 1994-2013 period, that "financial liberalization failed to increase economic growth for 80% and 70% of the sample when broad money and domestic credit were used to measure financial development, respectively" [13] (p. 81). In the same vein, Gries, Kraft and Meierrieks found, in the case of 16 sub-Saharan African countries, that "finance, growth and openness do not share significant long-run relationships for most of the sample" [14] (p. 1858).…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Financial Sector Development and Sophistication on Sustainable Economic Growth

et al. 2019

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The drivers of economic growth and development are among the most important issues explored by economic theory. Sustainability of economic development was previously linked by various economic schools of thought to natural resources (agriculture, land, minerals, metals etc.), labor force (including skills, productivity, and education), entrepreneurship or technology and innovation. Capital was later introduced by classical economic theory as the key element. Without significant capital accumulation, all other production factors remain idle. The value added of the production process is a result of the existence, the accessibility and the cost of capital. Therefore, the development and the sophistication of the financial sector has gradually become very important for any nation interested in sustainable growth. This paper investigates the impact of financial sector development, sophistication and performance on economic growth based on a panel regression methodology. We found statistically significant results that confirm the importance of this connection and that are very consistent with economic theory and previous relevant articles and studies.

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Financial development and economic growth: evidence from southern African development community countries

Cited by 29 publications

References 27 publications

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

The Co-Integrating Relationship Between Financial Inclusion and Economic Growth in the Southern African Development Community

The Impact of Financial Sector Development and Sophistication on Sustainable Economic Growth

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