Financial Stability and Economic Growth Nexus: Evidence From Sub-Saharan Africa Using Panel Data

Ahulu, Helena; MacCarthy, John; Muda, Paul

doi:10.32479/ijefi.11407

Cited by 5 publications

(3 citation statements)

References 28 publications

(34 reference statements)

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“…Unidirectional causality from financial stability to economic growth is detected in Brazil, South Africa, Indonesia, France and the UK. This finding is in line with Ahulu et al (2021), who find that bank capital has a significant impact on economic growth for African countries. Since the 1980s, there has been rapid capital inflows to developing countries and the banking sectors have started to develop in parallel.…”

Section: Data Methodology and Discussion Of The Findingssupporting

confidence: 91%

“…The finding that financial stability causes economic growth in F5 countries is mostly determined for the liquidity ratio variable. Our findings strongly support the evidence of Ahulu et al (2021), who find a significant and positive impact of liquid assets ratio on economic growth. Among the G7 countries, there is a causal relationship from financial stability to economic growth in Canada and the USA, and from economic growth to financial stability in Italy.…”

Section: Direction Of the Causality Between Financial Stability And E...supporting

confidence: 90%

“…Our findings provide support for studies that found a significant link from NPLs to economic growth (e.g. Manu et al, 2011;Creel et al, 2015;Ahulu et al, 2021) and indicate that policy makers should take action toward the rise of the NPLs.…”

Section: Empirical Findingssupporting

confidence: 85%

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Identifying the nexus between financial stability and economic growth: the role of stability indicators

Kurtoglu,

Durusu-Ciftci

2024

JFEP

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Purpose This study aims to examine the interrelationship between financial stability and economic growth with a comprehensive analysis. Design/methodology/approach The panel Granger causality testing approach is carried out to the panels of the Fragile Five (F5) and the Group of Seven (G7) countries for the period 1998–2020. To capture the different aspects of financial stability the authors use eight different indicators. Findings The findings reveal some important implications: the relationship between financial stability and economic growth is sensitive to the financial stability indicators for both the F5 and G7 countries. The stability indicators related to the credit market contain much more causality relationship with economic growth than the indicators related to the stock market. Z-score and provisions to nonperforming loans (NPLs) are among the two variables with the highest causality relationship with economic growth. The least number of causality link is found for the Regulatory Capital Ratio and Stock Price Volatility in F5 countries and Credit Ratio, NPLs and Stock Price Volatility in G7 countries. Economic growth affects financial stability through credit market stability indicators and mostly for the F5 countries. No causal relationship is found for any of the financial stability indicators of Canada, the UK and the USA from economic growth to financial stability. Originality/value Since the linkages between financial stability and economic growth may vary due to country/group specific differences, apart from the previous studies, the authors select two different groups of countries in terms of financial stability and economic size.

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Section: Data Methodology and Discussion Of The Findingssupporting

confidence: 91%

Section: Direction Of the Causality Between Financial Stability And E...supporting

confidence: 90%

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Identifying the nexus between financial stability and economic growth: the role of stability indicators

Kurtoglu,

Durusu-Ciftci

2024

JFEP

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Does Central Bank Independence Reduce Economic Vulnerability in Africa?

Messono,

Zambo,

Bouebe

2024

Int. J Fin Econ

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While many studies have highlighted the influence of the degree of central bank independence on economic and financial dynamics, less is known about its importance for economic vulnerability. The objective of this paper is to examine, for the first time, the effect of central bank independence on economic vulnerability in Africa. Based on the hypothesis that countries with more independent central banks are less vulnerable to external shocks, we estimate a dynamic panel model using the system generalised method of moments in a sample of 44 African countries between 1990 and 2017. Our results show that an independent central bank can significantly reduce the economic vulnerability of African countries by allowing monetary policy decisions to be made outside political influence, promoting financial stability, and strengthening the credibility of economic policy. These results remain robust to alternative measures of the main variables. Furthermore, the analysis of transmission mechanisms reveals that central bank independence has a negative effect on economic vulnerability in Africa through channels such as GDP growth, financial development, exchange rate misalignments and budget balance. We suggest that policymakers promote central bank independence in the development of public policies to address economic vulnerability in Africa.

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The Impact of United States Economic Policy Uncertainty on Financial Stability in BRICS Economies

Güngör

2024

SSRN Journal

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Financial Stability and Economic Growth Nexus: Evidence From Sub-Saharan Africa Using Panel Data

Cited by 5 publications

References 28 publications

Identifying the nexus between financial stability and economic growth: the role of stability indicators

Identifying the nexus between financial stability and economic growth: the role of stability indicators

Does Central Bank Independence Reduce Economic Vulnerability in Africa?

The Impact of United States Economic Policy Uncertainty on Financial Stability in BRICS Economies

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