1,720,984 research outputs found
Does bank-based financial development spur economic growth? Empirical evidence from the Democratic Republic of Congo (DRC)
Full text linkIn this study, we examined the dynamic causality between financial development and economic
growth in the Democratic Republic of the Congo (DRC), using time-series data from 1965 to
2015. Unlike some previous studies, the current study used three proxies to examine this
linkage. These are liquid liabilities as a percentage of GDP (FD1), deposit money bank assets
as a percentage of GDP (FD2), and bank deposits as a percentage of GDP (FD3). In addition,
the study used savings and inflation as intermittent variables, thereby creating a multivariate
Granger-causality model, and limiting the omission-of-variable bias, which has been found in
some previous studies. Using the ARDL bounds testing approach, the study found that there is
a short-run causal relationship between financial development and economic growth in the
DRC, but the direction of causality is dependent on the proxy used to measure the level of
financial development. When financial development was proxied by liquid liabilities as a
percentage of GDP, unidirectional Granger-causality was found to prevail in the short run,
running from economic growth to financial development. However, when deposit money bank
assets as a percentage of GDP and bank deposits as a percentage of GDP were used as proxies,
causality between financial development and economic growth was found to be bidirectional,
but only in the short run. The study recommends that policy efforts in the DRC should be
directed at developing both the financial sector and the real sector in the short run as both
sectors have been found to be mutually beneficial to each other in the main, in this study.Economic
Is tourism a spur to economic growth in South Africa: An empirical investigation
Full text linkIn this study, the dynamic Granger-causality between tourism development and economic growth in South Africa was empirically examined during the period 1995-2016. The study was motivated by the growing important role of the tourism sector in economic growth and development. It was also motivated by the limelight that the South African tourism sector has been enjoying in recent years, on the one hand, and the lack of sufficient coverage of tourism-growth nexus studies in many sub-Saharan African countries, on the other hand. Unlike some previous studies that used one proxy, the current study used two tourism proxies, namely tourist arrivals and tourism revenue, to examine this link. In addition, the study used exchange rate and foreign direct investment as intermittent variables in a multivariate Granger-causality model in order to address the omission-of-variable bias. To enhance the robustness of the results, the study also used two measures of tourism revenue, namely total tourism revenue and total tourism revenue as a percentage of GDP. Using the auto-regressive distributed lag (ARDL)-bounds testing approach and the error correction model, the study found that the direction of causality between tourism development and economic growth in South Africa is sensitive to the proxy used and the time under consideration. When the tourist arrivals variable is used as a proxy for tourism development, bidirectional causality between tourism development and economic growth is found to prevail in the short run, while a unidirectional causality from economic growth to tourism development is found to dominate in the long run. However, when tourism revenue is used as a proxy, a feedback relationship is found to prevail, but only in the short run. The result is robust across the two different measures of tourism revenue. The study, therefore, recommends that short-term policy efforts should be directed at developing the tourism sector and the real sector as both sectors have been found to reinforce each other in the short run, irrespective of the tourism proxy used.Economic
The impact of public expenditure on economic growth: A review of international literature
Full text linkIn this paper, theoretical and empirical literature on the relationship between government
expenditure and economic growth has been reviewed in detail. Specific focus was placed on the
review of literature that assessed the impact of government spending on economic growth. The
literature reviewed has shown that the impact of government spending on economic growth is not
clear cut. It varied from positive to negative; with some studies even finding no impact. The study
identified a number of factors that could be driving this inconsistency in conclusions by various
studies on the same topic. Differences in the study samples, study periods, methodologies employed
and the proxies for government expenditure have been the key causes of varying results and
conclusions on the nature of the impact of government spending on economic growth. This study has
also revealed that as economists get desperate in concluding the government expenditure-economic
growth debate, they are increasingly disaggregating the government expenditure into various
components and test the impact of each component on economic growth. The practice has, however,
not been able to move the debate closer to its conclusion, as the results from such practice are also
widely varying. Although the impact of government spending on economic growth was found to be
inconclusive, the scale tilts towards a positive impact.Economic
The impact of tourism development on economic growth in Sub-Saharan Africa
Full text linkThis study examines the dynamic impact of tourism development on economic growth in sub-Saharan Africa (SSA) using the Generalised Method of Moments and data covering the period from 2002 to 2018. The increasingly important role of tourism and the limelight the tourism sector has been enjoying of late, on the one hand, and the lack of sufficient coverage of tourism-growth nexus studies in Africa in general and in SSA in particular, motivated this study. Unlike most of the known panel data-based studies on tourism development and economic growth, this study has split the sub-Saharan African countries into low-income and middle-income sub-Saharan African countries. The results of the study show that tourism expenditure negatively affects economic growth while tourism receipts have the opposite effect in SSA. The findings are robust to the low-income sub-sample while only the effect of tourism expenditure is robust in the middle-income sub-sample.Economic
Does remittance inflow granger-cause economic growth in South Africa? A dynamic multivariate causality test
Full text linkIn this study we examine the dynamic causal relationship between remittances and economic growth in South Africa during the period from 1970 to 2017. Although South Africa is well known for being a source of cross-border remittances to various countries, especially in the African continent, remittance inflows to South Africa have grown in the recent past. The growth in remittances on the one hand, and the need to fight against poverty and inequality in South Africa and ultimately improve economic growth, on the other hand, prompted the need for this study. The study uses the autoregressive distributed lag (ARDL) approach within a multivariate Granger-causality setting to examine the remittance-growth causal link – in an effort to address the variable omission bias. The empirical findings of the study show that remittances and economic growth are not causally related in South Africa, irrespective of whether the estimations are done in the long run or in the short run. This finding, though contrary to the expectation, is not surprising, given the level of financial sector development South African.Economic
The impact of stock market development on unemployment: Empirical evidence from South Africa
Full text linkIn this paper, the impact of stock market development on unemployment in South Africa has been empirically examined using time-series data from 1980 to 2019. The study was motivated by the high level of structural unemployment facing the country, on the one hand, and a well-developed stock market, which compares favourably with those in advanced economies, on the other hand. The study aims to add value to the finance-unemployment literature by using a range of stock market development proxies, namely stock market capitalisation, the total value of stocks traded, and the turnover ratio. Based on the autoregressive distributed lag (ARDL) bounds testing approach, the results of the study revealed that in South Africa, stock market development has a negative impact on unemployment. These results were found to hold, irrespective of the stock market development proxy used and whether the analysis was conducted in the long run or in the short run. Based on these results, it can be concluded that the stock market unambiguously promotes job creation in South Africa. The study, therefore, recommends that policymakers should continue with the implementation of policies aimed at promoting stock market development in order to create more jobs, while at the same time ensuring that other structural challenges facing the labour market are also addressed.Colleges of Economic and Management Science
Financial intermediaries, capital markets, and economic growth: empirical evidence from six countries
Full text linkWorking Paper 01/2016 FINANCIAL INTERMEDIARIES, CAPITAL MARKETS, AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM SIX COUNTRIESAbstract
This paper investigates the dynamic causal relationship between financial systems and economic growth in three developing countries – South Africa, Brazil and Kenya – and three developed countries – the United States of America, the United Kingdom and Australia – during the period from 1980 to 2012. The study includes both bank-based and market-based financial systems. The study includes savings as an intermittent variable – thereby creating a trivariate Granger-causality model. The method of means-removed average is employed to construct bank- and market-based financial development indices. Using the ARDL bounds testing approach, the empirical results of this study reveal that the causality between financial systems and economic growth is indistinct; and it varies widely across countries and over time. Overall, the study finds that there is a long-run causal flow from bank-based financial development to economic growth in the UK and Australia; a distinct feedback loop in the case of Brazil; and a neutrality relationship in the case of Kenya, South Africa and the USA. For market-based financial development, the study finds evidence of bidirectional causality in the case of Kenya; a demand-following hypothesis in South Africa and Brazil; and a neutrality relationship in the case of Australia and the UK. The study, therefore, repudiates the traditional argument, which contends that the finance-growth nexus follows a supply-leading phenomenonColleges of Economic and Management Science
Poverty and economic growth in Ethiopia: a multivariate causal linkage
Full text linkPoverty and economic growth in Ethiopia: a multivariate causal linkageThis paper investigates the dynamic causal linkage between poverty reduction and economic growth in Ethiopia during the period from 1970 to 2014. To address the omission of variable bias, the study includes financial development and investment as intermittent variables – thereby creating a multivariate Granger-causality model. The study uses two proxies to measure the level of poverty in Ethiopia, namely: household consumption expenditure and infant mortality rate. Using the newly developed ARDL bounds testing approach to cointegration and the ECM-based causality model, the study finds that there is short-run bidirectional causality between economic growth and poverty reduction – irrespective of which variable is used as a proxy for poverty reduction. However, in the long run, the study finds unidirectional causality from economic growth to poverty reduction; but it fails to find any causal relationship between household consumption expenditure and economic growth. The study therefore concludes that while poverty reduction and economic growth are mutually beneficial in the short run; in the long run, it is economic growth that leads to poverty reduction when infant mortality rate is used as a proxy for poverty reduction.Colleges of Economic and Management Science
Financial development and economic growth : new evidence from six countries
Full text linkUsing 1980 - 2012 annual data, the study empirically investigates the dynamic
relationship between financial development and economic growth in three
developing countries (South Africa, Brazil and Kenya) and three developed countries
(United States of America, United Kingdom and Australia). The study was motivated
by the current debate regarding the role of financial development in the economic
growth process, and their causal relationship. The debate centres on whether
financial development impacts positively or negatively on economic growth and
whether it Granger-causes economic growth or vice versa. To this end, two models
have been used. In Model 1 the impact of bank- and market-based financial
development on economic growth is examined, while in Model 2 it is the causality
between the two that is explored. Using the autoregressive distributed lag (ARDL)
bounds testing approach to cointegration and error-correction based causality test,
the results were found to differ from country to country and over time. These results
were also found to be sensitive to the financial development proxy used. Based on
Model 1, the study found that the impact of bank-based financial development on
economic growth is positive in South Africa and the USA, but negative in the U.K –
and neither positive nor negative in Kenya. Elsewhere the results were inconclusive.
Market-based financial development was found to impact positively in Kenya, USA
and the UK but not in the remaining countries. Based on Model 2, the study found
that bank-based financial development Granger-causes economic growth in the UK,
while in Brazil they Granger-cause each other. However, in South Africa, Kenya and
USA no causal relationship was found. In Australia the results were inconclusive.
The study also found that in the short run, market-based financial development
Granger-causes economic growth in the USA but that in South Africa and Brazil, the
reverse applies. On the other hand bidirectional causality was found to prevail in
Kenya in the same period.D. Com. (Economics)Economic
Do financial systems spur economic growth in the USA? An empirical investigation
No full textIn this paper, we use the autoregressive distributed lag (ARDL) bounds testing approach to examine the
dynamic impact of both bank-based financial development and market-based financial development on
economic growth in the United States of America (USA) during the period 1980 to 2012. In order to
adequately capture the depth and width of the USA’s financial system, we used both bank-based and
market-based financial development indices as proxies for bank-based and market-based financial
systems. These indices were constructed from a number of bank- and market-based financial
development indicators, using the method of means-removed average. Our empirical results reveal that
both bank-based and market-based financial development have a positive impact on economic growth in
the USA. These results apply irrespective of whether the regression analysis is conducted in the long
run or in the short run.Colleges of Economic and Management Science
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