Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa

Batuo, Michael Enowbi; Mlambo, Kupukile; Asongu, Simplice A.

doi:10.1016/j.ribaf.2017.07.148

Cited by 163 publications

(129 citation statements)

References 43 publications

Supporting

Mentioning

104

Contrasting

Unclassified

Order By: Relevance

“…Consequently, there would be imminent capital outflows inducing currency volatilities. According to Batuo et al (2018), financial crisis recurrence, as for the case with most low-income states, is a clear indicator of the inefficacy of existing models of human and market behaviors in averting the constantly lingering risks and uncertainties that continually destroy real growth. Similarly, today's post-reform economic downtowns prevalent in Kenya are the repercussions of some impotent incumbent financial development policies.…”

Section: Introductionmentioning

confidence: 99%

The Asymmetric Influence of Financial Development on Economic Growth in Kenya: Evidence From NARDL

et al. 2020

View full text Add to dashboard Cite

This study analyzed the asymmetric effects of financial development on economic growth using a model augmented with inflation and government expenditure asymmetries to inform model specification. The research question used entails, Do their asymmetry changes significantly influence growth? Using the nonlinear auto-regressive distributive lag (NARDL), the most significant results posit that positive shocks in financial development in the short run and its negative shocks in the long run increase and decrease economic growth, respectively. Regarding inflation, its positive (negative) shocks in both runs, respectively, reduce (increase) economic growth. In comparison, positive shocks in financial development that spur growth in the short run and negative shocks in financial development (government expenditure) that increase (reduce) growth are the most domineering effects as the rest of the shocks insignificantly affect growth. Results clearly demonstrate to an environment steered by stable and sustainable inflation that regulated government expenditure and comprehensive financial system deepening would positively cause economic growth. Therefore, appropriate policies that favor low inflation and reduced government spending, expansion of feasibly reformed financial institutions, capital accumulation, and increased resource mobilization should be instituted if real growth is to positively happen.

show abstract

Section: Introductionmentioning

confidence: 99%

The Asymmetric Influence of Financial Development on Economic Growth in Kenya: Evidence From NARDL

et al. 2020

View full text Add to dashboard Cite

show abstract

“…The aftermath of the 2007-2008 Global Financial Crisis, the implications of finance and economic growth came under close scrutiny (Batuo & Asongu 2017). Financial activities were subjected to tighter control and monitoring following the 2007-2008 Global Financial Crisis.…”

Section: Introductionmentioning

confidence: 99%

Nonlinear Relationship between Financial Development and Economic Growth: Evidence from Post Global Financial Crisis Panel Data

Bahri

Nor²,

Sarmidi³

et al. 2018

JEM

View full text Add to dashboard Cite

Existing studies find that the nonlinear relationship between financial development and economic growth is inverted U-shaped or there exist Kuznets curve, where financial development harm growth after surpassed the threshold point. The objective of this study is to re-estimate the existing relationship between financial development and economic growth for 65 developing countries for the period post 2007-2008 Global Financial Crisis starts from 2009-2015 using Generalized Method-of-Moment (GMM). Three financial development indicators namely, domestic credit to private sector (DCPS), liquid liabilities (LL) and private credit to deposit money (PCDM) are used in this study. However, our findings are contrary to the previous study. Interestingly, our result shows that the nonlinear relationship between financial development and economic growth is U-shaped for all indicators. In other words, financial development accelerated economic growth after reaching the turning point. The results of U-test of Lind and Mehlum (2010) confirms that the U-shaped relationship exist. It shows that the higher financial development enhance the performance of economic growth. Thus, our results challenge the previous findings and recommend for policy review.

show abstract

“…Other papers, like Batuo, Mlambo and Asongu found that "financial development and liberalization have a statistically significant effect on financial instability. However, financial instability is shown to have a harmful effect on economic growth, this being more pronounced in the pre-liberalization period compared to the post-liberalization period" [16] (p. 6). Hence Nyasha and Odhiambo conclude that "the argument that the financial development always leads to economic growth should be taken with extreme caution" [17] (p. 223).…”

Section: Literature Reviewmentioning

confidence: 99%

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

et al. 2019

View full text Add to dashboard Cite

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.

show abstract

Linkages between financial development, financial instability, financial liberalisation and economic growth in Africa

Cited by 163 publications

References 43 publications

The Asymmetric Influence of Financial Development on Economic Growth in Kenya: Evidence From NARDL

The Asymmetric Influence of Financial Development on Economic Growth in Kenya: Evidence From NARDL

Nonlinear Relationship between Financial Development and Economic Growth: Evidence from Post Global Financial Crisis Panel Data

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

Contact Info

Product

Resources

About