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Title An analysis of financial development and economic growth nuxus evidence the South Africa development community
Full text http://hdl.handle.net/11070/3182
Date 2022
Author(s) Mufika, Diladileni Sabina
Abstract While there is vast evidence on finance-growth literature, the lack of consensus in the literature calls for continuous, renewed and more robust evidence. This study extends the empirical analysis of finance-growth nexus, by examining the possible non-linear relationship that could exist for the SADC region. The study analysed the impact of financial development on economic growth using annual panel dataset for 16 SADC countries from the period 1995 to 2019. The study used three proxies for financial development, namely, broad money, domestic credit to private sector, and domestic credit to private sector by banks. The study employed the system generalized method of moments (SYGMM) to address panel estimation problems, such as the presence of unobserved country specific effects, common time effects and potential endogeneity. The study found that liquid liabilities and domestic credit to the private sector have a negative and significant relationship with economic growth. The study found no non-linear relationship between financial development and economic growth when domestic credit to the private sector and liquid liabilities are considered. However, the results suggest an inverse U-shaped relationship between domestic credit to the private sector and economic growth. The results show a uni-directional causality between economic growth and financial development, confirming the demand-following hypothesis in the SADC region. For SADC to support growth through financial development, there is need to promote reforms that will address factors hindering the potentials of financial development in stimulating growth. This includes adopting appropriate policies that improve innovative financial infrastructure and promoting sound regulatory frameworks. In addition, it is recommended that pro-growth policies be strengthened so that growth subsequently pulls with it financial development.
Language en
Publisher University of Namibia
Type of publication Thesis
Repository Windhoek - University of Namibia
Added to C-A: 2022-07-06;10:29:55