scholarly journals Interest Rate Deregulation, Bank Development And Economic Growth In South Africa: An Empirical Investigation

2010 ◽  
Vol 9 (11) ◽  
Author(s):  
Nicholas M Odhiambo
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Interest Rate ◽  
Causal Relationship ◽  
Financial Development ◽  
Positive Impact ◽  
Strong Support ◽  
Prima Facie ◽  
Financial Depth ◽  
The Impact

In this paper the dynamic relationship between interest rate reforms, bank-based financial development and economic growth is examined – using two models in a stepwise fashion. In the first model, the impact of interest rate reforms on financial development is examined using a financial deepening model. In the second model, the dynamic causal relationship between financial development and economic growth is examined, by including investment as an intermittent variable in the bi-variate setting, thereby creating a simple tri-variate causality model. Using cointegration and error-correction models, the study finds strong support for the positive impact of interest rate reforms on financial development in South Africa. However, contrary to the results from some previous studies, the study finds that financial development, which results from interest rate reforms, does not Granger cause investment and economic growth. In addition, the study finds a uni-directional causal flow from investment to financial development and prima-facie causal flow from investment to growth. The study, therefore, concludes that although interest rate reforms impact positively on financial depth in South Africa, the causal relationship between financial depth and economic growth tends to take a demand-following path. Moreover, given the causal flow from investment to financial development and a prima facie causal flow from investment to growth, it is likely that the economic development in South Africa is driven largely by the growth of the real sector rather than the financial sector.

Re-examining the Impact of Financial Development on the Economic Growth of North Cyprus Through the Moderating Role of the Education Sector

2020 ◽  
Author(s):  
Nuru Giritli ◽  
Demet Beton Kalmaz
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Financial Development ◽  
Unit Root Test ◽  
Education Sector ◽  
Causality Test ◽  
Financial Depth ◽  
Multiplier Effect ◽  
Sustainable Economic Growth ◽  
The Impact

Abstract This study examines the impact of financial development on economic growth with the multiplier effect of the higher education by employing yearly data covering the years between 1990 and 2018 measured in TL. The results reached could shape the policies in achieving sustainable economic growth. Co-integration between the series are tested with ARDL based bounds test; since Zivot-Andrews structural unit root test results showed that variables are integrated at different orders. Furthermore, FMOLS and DOLS are applied to check for robustness. Moreover, Toda-Yamamoto Causality test is employed to test for the causal relationship between the series. Results show that there is a bidirectional causal relationship between financial depth and economic growth; and unidirectional causal relationships from money supply to financial depth, from economic growth and financial depth to education sector. Diagnostic and stability tests results confirm the reliability and stability of the parameters of the model employed.

How Does Public Debt Affect the Indian Macroeconomy? A Structural VAR Approach

2020 ◽  
Vol 14 (3) ◽  
pp. 253-284
Author(s):  
Ranjan Kumar Mohanty ◽  
Sidheswar Panda
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Public Debt ◽  
Positive Impact ◽  
Decomposition Analysis ◽  
Structural Var ◽  
Adverse Impact ◽  
Mixed Effect ◽  
Domestic Debt ◽  
The Impact

The study investigates the macroeconomic effects of public debt in India during 1980–2017 using a structural vector autoregression framework. The objective is to examine the impact of public debt on the interest rate, investment, inflation and economic growth in India. The results of the impulse response functions show that public debt has an adverse impact on economic growth but a positive impact on the long-term interest rate in the short run and a mixed effect (both negative and positive) on investment and inflation. We also find that domestic debt has a more adverse impact on the economy than external debt. The estimated variance decomposition analysis finds that much of the variation in selected macro variables are explained by public debt and growth in India. This study suggests that public debt especially domestic debt should be controlled and channelled productively to have a favourable impact on the economy. JEL Classification: H63, O40, C40

The nexus between financial development and energy consumption: Estimating the role of foreign direct investment, economic growth and urbanization

2021 ◽  
pp. 0958305X2110453
Author(s):  
Jaleel Ahmed ◽  
Shuja ur Rehman ◽  
Zaid Zuhaira ◽  
Shoaib Nisar
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Energy Consumption ◽  
Financial Development ◽  
Latin American ◽  
Direct Investment ◽  
Negative Impact ◽  
Positive Impact ◽  
Supply And Demand ◽  
The Impact

This study examines the impact of financial development on energy consumption for a wide array of countries. The estimators used for financial development are foreign direct investment, economic growth and urbanization. The study employed a panel data regression on 136 countries with time frame of years 1990 to 2019. The model in this study deploys system GMM technique to estimate the model. The results show that financial development has a significant negative impact on energy consumption overall. Foreign direct investment and urbanization has significant impact on energy consumption. Also, economic growth positive impact on energy consumption its mean that economic growth promotes energy consumption. When dividing further the sample into different groups of regions such as Asian, European, African, North/Latin American and Caribbean countries then mixed results related to the nexus between financial development and energy consumption with respect to economic growth, urbanization and foreign direct investment. The policymakers in these different groups of countries must balance the relationship between energy supply and demand to achieving the sustainable economic development.

scholarly journals Impact of unemployment and income on entrepreneurship in post-apartheid South Africa: 1994–2015

2018 ◽  
Vol 10 (1) ◽  
Author(s):  
Darma Mahadea ◽  
Irrshad Kaseeram
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Employment Growth ◽  
Positive Impact ◽  
Early Stage ◽  
National Development ◽  
Entrepreneurial Activity ◽  
Per Capita Gdp ◽  
Per Capita ◽  
The Impact

Background: South Africa has made significant progress since the dawn of democracy in 1994. It registered positive economic growth rates and its real gross domestic product (GDP) per capita increased from R42 849 in 1994 to over R56 000 in 2015. However, employment growth lagged behind GDP growth, resulting in rising unemployment. Aim and setting: Entrepreneurship brings together labour and capital in generating income, output and employment. According to South Africa’s National Development Plan, employment growth would come mainly from small-firm entrepreneurship and economic growth. Accordingly, this article investigates the impact unemployment and per capita income have on early stage total entrepreneurship activity (TEA) in South Africa, using data covering the 1994–2015 period. Methods: The methodology used is the dynamic least squares regression. The article tests the assertion that economic growth, proxied by real per capita GDP income, promotes entrepreneurship and that high unemployment forces necessity entrepreneurship. Results: The regression results indicate that per capita real GDP, which increases with economic growth, has a highly significant, positive impact on entrepreneurial activity, while unemployment has a weaker effect. A 1% rise in real per capita GDP results in a 0.16% rise in TEA entrepreneurship, and a 1% rise in unemployment is associated with a 0.25% rise in TEA. Conclusion: There seems to be a strong pull factor, from income growth to entrepreneurship and a reasonable push from unemployment to entrepreneurship, as individuals without employment are forced to self-employment as a necessity, survival mechanism. Overall, a long-run co-integrating relationship seems plausible between unemployment, income and entrepreneurship in South Africa.

Interest rate liberalization and economic growth nexus: does corruption matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdulhadi Aliyara Haruna ◽  
Abu Sufian Abu Bakar
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Positive Impact ◽  
Reform Process ◽  
Negative Effects ◽  
African Countries ◽  
Cross Sectional ◽  
Content Type ◽  
Interest Rate Liberalization ◽  
The Impact

Purpose This paper aims to examine the impact of interest rate liberalization on economic growth and the relevance of corruption in the five selected sub-Saharan African countries. Design/methodology/approach The study used the modified version of Driscoll and Kraay’s model by Hoechle, which solved the effects of cross-sectional dependence and heteroscedasticity. Findings The findings reveal a positive impact of the index on economic growth, and it was found that foreign direct investment (FDI) and credit to private sector by banks (CPSB) all stimulate economic growth. The interaction terms of corruption with FDI and CPSB indicate negative effects that show how corruption erodes the benefits of liberalization. Finally, the paper recommends the pursuit of appropriate policies with the sole aim of eradicating corruption and providing a conducive environment for business. Originality/value The paper developed a composite domestic financial liberalization index to capture the timing and essential dimensions of the reform process. The study investigates the effect of interest rate liberalization on economic growth and the relevance of corruption. Most of the recent and past studies only examined the impact of interest rate reforms on growth without investigating the relevance of corruption.

scholarly journals Research of the synergetic Effects of the Impact of Innovative and Related Macroeconomic Factors on Economic Growth

2021 ◽  
Vol 25 (4) ◽  
pp. 98-109
Author(s):  
B. D. Matrizaev
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Technological Innovation ◽  
Positive Impact ◽  
Innovation Policy ◽  
Coordinated Development ◽  
Macroeconomic Factors ◽  
Long Run ◽  
Stable Growth ◽  
The Impact

This article examines the main mechanisms and tools for implementing innovation policy in countries with fastgrowing economies such as China and India. The study aims to explore the causal relationship between innovation, key macroeconomicvariables and economic growth.The author applies the entropy method and adapts the Graymodel to build a system of indices for assessing the coordination of the interaction of technological innovation, financial development and economic growth. The results show that the degree of integration of the financial system into innovation processes has a significant positive impact on the success of innovation, which is measured by patent activity. Our research proves that innovation indirectly affects economic growth through quality of life, infrastructure efficiency, employment, and rade openness. The findings of the research reveal that both economic growth and innovation tend to depend on a number of conjugate variables in the long run: capital, labor, etc. The author concludes that a comprehensive analysis of technological innovation, financial development and economic growth shows that the three-factor relationship has great potential for coordinated development, as a result of which, according to the calculated forecasts, economic growth in fast-growing economies will significantly accelerate its pace in the next five years. The subject of further research may be an analysis of whether the degree of conjugation of connectivity and coordination between the three systems will maintain stable growth at high values and whether they will be able to reach the stage of transformation.

scholarly journals The impact of economic growth on unemployment in South Africa: 1994 – 2012

2015 ◽  
Vol 12 (4) ◽  
pp. 699-707
Author(s):  
Handson Banda ◽  
Ireen Choga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
South African ◽  
Time Series Data ◽  
Positive Impact ◽  
Labour Productivity ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
Long Run ◽  
The Impact

One of the most pressing problems facing the South African economy is unemployment, which has been erratic over the past few years. This study examined the impact of economic growth on unemployment, using quarterly time series data for South Africa for the period 1994 to 2012.Johansen Co-integration reflected that there is stable and one significant long run relationship between unemployment and the explanatory variables that is economic growth (GDP), budget deficit (BUG), real effective exchange rate (REER) and labour productivity (LP). The study utilized Vector Error Correction Model (VECM) to determine the effects of macroeconomic variables thus REER, LP, GDP and BUG on unemployment in South Africa. The results of VECM indicated that LP has a negative long run impact on unemployment whilst GDP, BUG and REER have positive impact. The study resulted in the following policy recommendation: South African government should re-direct its spending towards activities that directly and indirectly promote creation of employment and decent jobs; a conducive environment and flexible labour market policies or legislations without impediments to employment creation should be created; and lastly government should prioritise industries that promote labour intensive. All this will help in absorbing large pools of the unemployed population thereby reducing unemployment in South Africa.

The state's role in promoting Nigerian financial development and economic growth

2014 ◽  
Vol 41 (5) ◽  
pp. 380-396 ◽  
Author(s):  
Godfrey Chidozie Uzonwanne
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Financial Development ◽  
Developing Economies ◽  
The State ◽  
Cointegration Analysis ◽  
Developing Economy ◽  
Social Implication ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this study is to propose a framework for conceptualizing the finance-growth theory in developing economies. Design/methodology/approach – The study uses a cointegration and error correction model to investigate the possible influence of key socio-political characters of a state on the causal relationship between financial development and economic growth. A developing economy (Nigeria) which had experienced decades of autocratic military governance was studied. Three characters of the state (ethnicity, civil war and military governance) were derived from a historical review and were introduced into the cointegration analysis as dummy variables. Findings – Evidence of a causal relationship was found to exist from financial development to economic growth and the characters of the state were found to have no significant impact on this relationship. Research limitations/implications – The research limitations were based on the reliability of data recorded between 1960 and 2007. Practical implications – This study is practical from the point of view of the integration of qualitative social disturbances into a quantitative model targeted at exploring the practical developmental impact these disturbances may have had and continue to have on economic growth. Social implications – The social implication of this study stems from the impact that adverse socio-political influences may have on financial development and economic growth. Originality/value – This is an original piece of research focused at understanding the unique social, political and macroeconomic circumstance of a strategically relevant developing economy.

scholarly journals International Remittances and Economic Growth in Ghana: Does the Measure Of Financial Development Matter?

2020 ◽  
Vol 2 (1) ◽  
pp. 46-59 ◽  
Author(s):  
Samuel Antwi ◽  
Eugene Oware Koranteng ◽  
Eugene Oware Koranteng
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Negative Impact ◽  
Positive Impact ◽  
Series Data ◽  
Aggregate Output ◽  
Real Gdp ◽  
International Remittances ◽  
The Impact

Empirical results of the effect of international remittances on economic growth of individual countries and groups of countries have yielded mixed results. This study is intended to add to the debate on the impact of international remittances on the aggregate output of individual countries, Ghana in this case. An earlier panel data study found a negative impact of remittance on real GDP and prompted further research on the topic for individual countries and groups of countries. The papers which followed and were able to correct for endogeneity in the models, found a mild positive impact of private unrequited remittances on economic growth. The impact of remittances on economic growth of a particular country depends on the proportion of remittances invested and consumed, the level of financial development and the quality of institutions in the country. This study used time series data from 1990 to 2014 on Ghana and found a positive impact of remittances on the growth rate of real GDP. Engel and Granger Cointegration test and Error Correction Models were used. Remittances were found to be pro-cyclical. Granger causality tests which corrects for the errors of cointegrated variables found causality running from financial development to remittances and from remittances to real GDP. Remittances have been found in other studies to benefit the Ghanaian economy by reducing poverty and sustaining the current account. This study shows a positive impact of remittances on aggregate output. Thus requiring policies to increase the flows and encourage their investment. Keywords: International Remittances, Economic Growth, Ghana, Financial Development.

scholarly journals Financial Development, Financial Openness and Economic Growth in Nigeria

2021 ◽  
Vol 11 (3) ◽  
Author(s):  
Christian E. Bassey ◽  
Okoiarikpo Benjamin Okoi ◽  
Ikpe Kingsley Imoh
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Distress ◽  
Positive Impact ◽  
Financial Openness ◽  
Insurance Sector ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

This study examined the impact of financial development and financial openness on economic growth in Nigeria between 1981 and 2019. This was done through the use of the Auto-Regressive Distributed Lag (ARDL) model. In doing this, the ratio of credit to the private sector to the GDP and broad money to narrow money were used as measures of financial development and financial openness respectively. The study found that financial development has a positive and insignificant impact on economic growth in Nigeria in the long and short-run. The study also found that financial openness has a negative and insignificant impact on economic growth in Nigeria in the long-run. The results of the study further revealed that simultaneous existence of financial development and financial openness has an insignificant but positive impact on economic growth in Nigeria in the long-run. Based on the findings, the study recommended that the CBN should increase its efforts towards the regulation and supervision of the financial sector to reduce the incidence of financial distress. The study also recommended that efforts to develop the mortgage and insurance sector and the capital market should be intensified through regulatory improvements, improvements in the instruments in use in the market as well as public enlightenment programs to increase awareness of the potentials of the mortgage, insurance and capital markets. The final recommendation made by the study is that more restrictions should be placed on the inflow of capital in and out of the country to guard against sudden capital flow reversals.

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