The nexus between financial development and economic growth in the SADC region: Empirical evidence using ARDL-PMG estimation techniques

Ngonidzashe Chiranga

doi:10.15637/jlecon.2588

Yazarlar

Ngonidzashe Chiranga Tshwane University of Technology / Güney Afrika https://orcid.org/0000-0001-8150-0282

DOI:

https://doi.org/10.15637/jlecon.2588

Anahtar Kelimeler:

ARDL- Economic Growth- Financial Development- SADC

Özet

This study aims to provide empirical insights into the financial development and economic growth nexus in the SADC region by examining how much financial development translates to economic growth in the short or long run. Also, the examination of economic growth is impacted more by external or internal factors. Also, causality testing economic growth on financial development. The study applies the panel Autoregressive Distributive method (ARDL-PMG) on a panel data set of 11 SADC countries in the period 1998-2021. The study finds a negative and significant relationship between economic growth and financial development at a 1% level of significance in the long run whereas in the short run, the relationship is negative but not significant. Furthermore, the study findings suggest that economic growth in the SADC region is more influenced by external factors than internal factors as signified by the significant negative long-run influence of external debt and the significant positive influence of trade openness. On the other hand, financial development has a neutral impact on economic growth. The study recommends that SADC countries should embrace outward-looking policies as an avenue to learn new ideas from the world.

İndirmeler

İndirme verileri henüz mevcut değil.

Referanslar

ADEBAYO, T. S., AWOSUSI, A. A., & EMINER, F. (2020). Stock market-growth relationship in an emerging economy: empirical finding from ARDL-based bounds and causality approaches. Journal of Economics and Business, 3(2).

AKINLO, T., & OKUNLOLA, C. O. (2021). Trade openness, institutions and economic growth in Sub-Saharan Africa. Jurnal Perspektif Pembiayaan Dan Pembangunan Daerah, 8(6), 541-560.

ALSHUBIRI, F. (2021). The stock market capitalisation and financial growth nexus: an empirical study of western European countries. Future Business Journal, 7(1), 46.

ATTARD, J. (2019). Public Debt and economic growth nexus: a dynamic panel ARDL approach.

BECK, T., DEMIRGÜÇ-KUNT, A., & MERROUCHE, O. (2013). Islamic vs. conventional banking: Business model, efficiency and stability. Journal of Banking & finance, 37(2), 433-447.

CHU, L. K. (2020). Financial structure and economic growth nexus revisited. Borsa Istanbul Review, 20(1), 24-36.

ELHASSAN, T., & BRAIMA, B. (2020). Impact of khartoum stock exchange market performance on economic growth: An autoregressive distributed lag ARDL bounds testing model. Economies, 8(4), 86.

GUEI, K. M., & LE ROUX, P. (2019). Trade openness and economic growth: Evidence from the Economic Community of Western African States region. Journal of Economic and Financial Sciences, 12(1), 1-9.

LUCAS JR, R. E. (1988). On the mechanics of economic development. Journal of monetary economics, 22(1), 3-42.

MARQUES, L. M., FUINHAS, J. A., & MARQUES, A. C. (2013). Does the stock market cause economic growth? Portuguese evidence of economic regime change. Economic modelling, 32, 316-324.

MASIH, M., & MAJID, H. A. (2013). Stock price and industrial production in developing countries: A dynamic heterogeneous panel analysis.

MATEI, I. (2020). Is financial development good for economic growth? Empirical insights from emerging European countries. Quantitative Finance and Economics, 4(4), 653-678.

MLAMBO, C. (2021). The impact of port performance on trade: The case of selected African states. Economies, 9(4), 135.

MOGASHWA, P., & MOLELE, S. B. (2023). Documenting major drivers of trends in trade balance for SADC region amid the full implementation of the African Continental Free Trade Area (AFCFTA). International Journal of Research in Business and Social Science (2147-4478), 12(3), 286-296.

MOSIKARI, T. J. (2017). An analysis of manufactured exports and economic growth in Southern African Development Community (SADC). North-West University (South Africa) Mafikeng Campus,

NATHANIEL, S. P., OMOJOLAIBI, J. A., & EZEH, C. J. (2020). Does stock market-based financial development promotes economic growth in emerging markets? New evidence from Nigeria. Serbian Journal of Management, 15(1), 45-54.

NEV, T. T., SİDİ, C. P., Adofu, I., & Gimba, O. J. TRADE BALANCE, INSTITUTIONS AND ECONOMIC GROWTH IN SUB-SAHARAN AFRICA.

NGUYEN, H. M., LE, Q. T.-T., HO, C. M., NGUYEN, T. C., & VO, D. H. (2022). Does financial development matter for economic growth in the emerging markets? Borsa Istanbul Review, 22(4), 688-698.

ODHIAMBO, N. M. (2021). Is export-led growth hypothesis still valid for sub-Saharan African countries? New evidence from panel data analysis. European Journal of Management and Business Economics, 31(1), 77-93.

OLAYUNGBO, D. O., & QUADRI, A. (2019). Remittances, financial development and economic growth in sub-Saharan African countries: evidence from a PMG-ARDL approach. Financial Innovation, 5(1), 1-25.

PATRICK, H. T. (1966). Financial development and economic growth in underdeveloped countries. Economic development and Cultural change, 14(2), 174-189.

PESARAN, M. H., SHIN, Y., & SMITH, R. P. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American statistical Association, 94(446), 621-634.

ROMER, P. M. (1986). Increasing returns and long-run growth. Journal of political economy, 94(5), 1002-1037.

SMOLO, E. (2024). The Institutions-Finance-Growth Nexus: The Case Study of EU and European Transition Economies. Journal of Economics, Law, and Society, 1(1), 5-22.

SOLOW, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.

SWAN, T. W. (1956). Economic growth and capital accumulation. Economic record, 32(2), 334-361.

VALICKOVA, P., HAVRANEK, T., & HORVATH, R. (2015). Financial development and economic growth: A meta‐analysis. Journal of economic surveys, 29(3), 506-526.