Financial Development and Investment in Botswana: A Multivariate Causality Test

Muyambiri, Brian; Odhiambo, Nicholas M.

doi:10.2478/foli-2018-0020

Cited by 8 publications

(11 citation statements)

References 27 publications

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“…Supporting the findings of Ndikumana, 2005, Nazlioglu et al , 2009, Demirhan, 2016, Sakyi et al , 2016, Muyambiri and Odhiambo, 2017 and 2018a, b, c, d present study finds long run relationship between financial development and Investment. The results indicate that in four specifications, F -statistics is greater than the upper critical bound at 1% significance level and in two specifications, F -statistics is greater than the upper critical bound at 5% significance level.…”

Section: Empirical Findingssupporting

confidence: 86%

“…Muyambiri and Odhiambo (2016, 2017, 2018a, b, c, d) examine the impact of both bank-based and market-based financial development on investment in Botswana during 1976–2012, using the ARDL bound testing approach. The empirical result shows that while bank-based financial development has both a long-run and short-run positive impact on investment in Botswana, market-based financial development has no impact on investment.…”

Section: Financial Development and Investmentmentioning

confidence: 99%

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Does financial development matter for domestic investment? Empirical evidence from India

Sinha

Shastri

2021

SAJBS

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PurposeThis paper empirically examines the impact of financial development on domestic investment in India for the period 1989–2017.Design/methodology/approachThis study employs the autoregressive distributed lag (ARDL) bounds testing approach to co-integration to test the long-run relationship between financial development and domestic investment. To test the direction of causality, Toda–Yamamoto causality test and vector error correction model (VECM) Granger causality/Block Exogeneity Wald test have been employed. Investment has been measured by Gross Capital Formation. To capture various aspects of financial development in India, eight alternative indicators (both bank based and market based) have been used. With the help selected indicators, a composite index (FINDEX) of financial development has been constructed using principal component analysis (PCA).FindingsThe estimated result finds evidence in favour of positive, short-run and long-run impact of financial development on investment in the Indian economy. Both bank-based and market-based indicators are found to significantly affect the level of investment. The significant effect of efficiency-based financial development indicators (both bank based and market based) upon domestic investment implies that there is a need to implement policies that ensure the efficiency of financial intermediation.Originality/valueTo the best of authors' knowledge, not much research has been done to explore the relationship between financial development and domestic investment, especially in the case of Indian economy. This study also tries to find the impact of bank-based and market-based financial development indicators upon domestic investment to explore banks vs market issue.

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Section: Empirical Findingssupporting

confidence: 86%

Section: Financial Development and Investmentmentioning

confidence: 99%

Does financial development matter for domestic investment? Empirical evidence from India

Sinha

Shastri

2021

SAJBS

View full text Add to dashboard Cite

show abstract

“…Asongu (2014) evaluates the causal relationship between bank-based financial development and investment for sixteen African countries. In their study of Mauritius, Muyambiri and Odhiambo (2016) also find that both bank-based and market-based financial development precede investment, both in the long run and the short run. They make use of composite financial development indices to measure financial development.…”

Section: The Causal Relationship Between Financial Development and Investment: Empirical Evidencementioning

confidence: 93%

The Causal Relationship between Financial Development and Investment: a Review of Related Empirical Literature

Muyambiri

Odhiambo

2018

CER

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This article reviews the theoretical and empirical literature on the causal relationship between financial development and investment. Based on the literature considered, it can be concluded that there is little consensus to date on the direction of causality between financial development and investment. The study concludes that most of the research done on the causal relationship between financial development and investment is highly skewed towards assessing the causal relationship between the bank‑based side of financial development, as compared to the market‑based side of financial development. Given the number of studies assessed, the causal relationship between financial development and investment appears to be inconclusive, at best. Moreover, the study shows that the relationship between these two macroeconomic variables seems to differ from country to country; it is dependent on the proxies used to measure the level of financial development, as well as the methodology employed.

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“…Third, the ARDL procedure uses a single reduced-form equation. Lastly, the ARDL is flexible as it allows a general to specific modelling framework by varying the number of lags (Muyambiri and Odhiambo, 2018).…”

Section: Cointegration -Autoregressive Distributed Lag Ardl Bounds Testing Proceduresmentioning

confidence: 99%

Relative Impact of Domestic and Foreign Public Debt on Economic Growth in South Africa

Saungweme

Odhiambo

2020

Journal of Applied Social Science

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This paper investigates the debt-growth nexus by testing both the impact of aggregate public debt on economic growth and the relative impact of domestic and foreign public debt on economic growth using South Africa as the case study—from 1970 to 2017. Based on the autoregressive distributed lag (ARDL) technique, the findings reveal that the impact of aggregated public debt on economic growth in South Africa is statistically significant and negative, both in the short run and in the long run. The results further reveal that domestic public debt and economic growth have a statistically significant and positive relationship in the short run only. Furthermore, foreign public debt has a statistically significant and negative relationship with economic growth but only in the long run. Therefore, the study recommends the government to manage effectively its debt and to finance long-term high-returning productive investments that should translate into economic growth. Finally, the study cautions the country against growing public debt, predominantly foreign debt, to finance its increasing recurrent expenditure needs.

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Financial Development and Investment in Botswana: A Multivariate Causality Test

Cited by 8 publications

References 27 publications

Does financial development matter for domestic investment? Empirical evidence from India

Does financial development matter for domestic investment? Empirical evidence from India

The Causal Relationship between Financial Development and Investment: a Review of Related Empirical Literature

Relative Impact of Domestic and Foreign Public Debt on Economic Growth in South Africa

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