The Direction of Causality Between Financial Development and Economic Growth in Tanzania. An Empirical Analysis PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download The Direction of Causality Between Financial Development and Economic Growth in Tanzania. An Empirical Analysis PDF full book. Access full book title The Direction of Causality Between Financial Development and Economic Growth in Tanzania. An Empirical Analysis by Erasmus Hyera. Download full books in PDF and EPUB format.
Author: Erasmus Hyera
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
Get Book Here
Book Description
This paper examines causality relationship between financial development and economic growth in Tanzania over the period 1980 to 2012. In time series context, recently econometric techniques were used; namely Augmented Dickey and Fuller test (ADF) for unit roots test, Johansen test for Co-intergration test, Vector error correction model (VECM) tested for short run and long run causality, a pairwise Granger causality test used to establish the direction of causality and Variance decomposition (VD) under VAR framework applied for validating strengths of findings outside the estimated sampling period. In overall empirical findings can be summarized as follows. Firstly, there is long-run relationship between financial development and economic growth. Secondly, granger causality test suggests economic growth causes financial development in a short-run when broad money to nominal GDP and liquidity liability to nominal GDP used, however when credit to private sector to nominal GDP was used findings confirmed evidence of bidirectional causality between financial development and economic growth, and in a long-run causality run only from Economic growth to financial development even in outside the estimated sampling period. Thirdly, financial sector has been effective in promoting economic growth in a short run only and economic growth variable was the most exogenous leading variable than others suggesting, financial sector has played little role in promoting economic growth in Tanzania. Lastly, capital accumulation channel via gross domestic investments to nominal GDP links financial development and economic growth in a short run only, suggesting long-term financial infrastructures that are necessary for successful promoting investments for spurring economic growth still remain weak in Tanzania. These findings are contrary to the convectional results favored only supply view. Although study has confirmed mixed results on the direction of causality between financial development and economic growth in Tanzania, in view of feedback effect results, study recommend more efforts should be devoted to the deepening of financial sector by enhancing competition, improving business environment, investing on human resources and legal environment.
Author: Erasmus Hyera
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
Get Book Here
Book Description
This paper examines causality relationship between financial development and economic growth in Tanzania over the period 1980 to 2012. In time series context, recently econometric techniques were used; namely Augmented Dickey and Fuller test (ADF) for unit roots test, Johansen test for Co-intergration test, Vector error correction model (VECM) tested for short run and long run causality, a pairwise Granger causality test used to establish the direction of causality and Variance decomposition (VD) under VAR framework applied for validating strengths of findings outside the estimated sampling period. In overall empirical findings can be summarized as follows. Firstly, there is long-run relationship between financial development and economic growth. Secondly, granger causality test suggests economic growth causes financial development in a short-run when broad money to nominal GDP and liquidity liability to nominal GDP used, however when credit to private sector to nominal GDP was used findings confirmed evidence of bidirectional causality between financial development and economic growth, and in a long-run causality run only from Economic growth to financial development even in outside the estimated sampling period. Thirdly, financial sector has been effective in promoting economic growth in a short run only and economic growth variable was the most exogenous leading variable than others suggesting, financial sector has played little role in promoting economic growth in Tanzania. Lastly, capital accumulation channel via gross domestic investments to nominal GDP links financial development and economic growth in a short run only, suggesting long-term financial infrastructures that are necessary for successful promoting investments for spurring economic growth still remain weak in Tanzania. These findings are contrary to the convectional results favored only supply view. Although study has confirmed mixed results on the direction of causality between financial development and economic growth in Tanzania, in view of feedback effect results, study recommend more efforts should be devoted to the deepening of financial sector by enhancing competition, improving business environment, investing on human resources and legal environment.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages : 8
Get Book Here
Book Description
Author: Mr.Pablo Emilio Guidotti
Publisher: International Monetary Fund
ISBN: 1451852452
Category : Business & Economics
Languages : en
Pages : 38
Get Book Here
Book Description
This paper examines the empirical relationship between long–run growth and the degree of financial development, proxied by the ratio of bank credit to the private sector as a fraction of GDP. We find that this proxy enters significantly and with a positive sign in growth regressions on a large cross–country sample, but with a negative sign using panel data for Latin America. Our findings suggest that the main channel of transmission from financial development to growth is the efficiency of investment, rather than its volume. We also present a model where the negative correlation between financial intermediation and growth results from financial liberalization in a poor regulatory environment.
Author: Jehovaness Aikaeli
Publisher:
ISBN:
Category :
Languages : en
Pages : 17
Get Book Here
Book Description
This study determines causal relationship between financial development and economic performance in Tanzania. The study employs cointegration and vector error correction model techniques. Granger causality test was applied to ascertain causation between financial development and economic performance. Overall economic performance is measured by the GDP out-turn; and proxies of financial development are: the ratio of money supply to nominal GDP; and growth of credit to private sector. The results show that there is a stable long-run relationship between financial development and economic performance in Tanzania. Granger causality test indicates that the causality runs from financial development to economic performance.
Author: Suleiman Abu-Bader
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
This paper examines the causal relationship between financial development and economic growth for six Middle Eastern and North African countries (Algeria, Egypt, Israel, Morocco, Syria, and Tunisia), within a quadvariate vector autoregressive framework. We employ four different measures of financial development and apply the augmented vector autoregression vector (VAR) methodology of Toda and Yamamoto to test for Granger causality. Our empirical results strongly support the hypothesis that finance leads to growth in five out of the six countries. Only in Israel could weak support be found for causality running from economic growth to financial development but no causality in the other direction. These findings suggest the need to accelerate the financial reforms that have been launched since the mid 1980s and to improve the efficiency of these countries financial systems to stimulate saving/investment and, consequently, long-term economic growth.
Author: Mina Baliamoune-Lutz
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
This paper presents an empirical analysis of the relationship between financial system development and economic development. Using cointegration and vector autoregressive estimations on annual data from Africa, we examine the nature of the relationship between financial development and income. We find mixed results on both the short- and the long-run relationships between the two variables. We find finance causing income, income causing finance, and bidirectional causality. The results indicate that neither the short-run effects nor the long-run relationship seem to linearly depend on the level of financial development or the stage of development.
Author: Dedy Ramdhani
Publisher:
ISBN:
Category :
Languages : en
Pages :
Get Book Here
Book Description
Author: Nuhu A. Sansa
Publisher:
ISBN:
Category :
Languages : en
Pages : 15
Get Book Here
Book Description
This paper investigates the direction of causality between economic growth and credit market development in Tanzania for the period 2010-2017 using annual data and applying the statistical method under SPSS program. Linear regression and correlation methods were both used to analyse the relationship between dependent variable and independent variables and obtaining necessary coefficients for determining the regression equation. Findings of the study suggest that there is an opposite correlation between the economic growth rate, total credit value in million USD and average exchange rate (when one variable increases, the other decreases). Meanwhile, a positive correlation between inflation and economic growth has been observed, meaning that the inflation rates have contributed positively to economic growth of Tanzania. The study also observed the influence of inflation in economic growth and hence calls for effective control of inflation equation.
Author: Roseline Oluitan
Publisher:
ISBN: 9783659261374
Category :
Languages : en
Pages : 184
Get Book Here
Book Description
The book consists of six chapters with emphasis on the African continent. The first chapter deals with the introductory aspect of the work while a theoretical background is provided in the second chapter. The third chapter is an empirical work that examines the effect of banks with particular emphasis on their credit function to impact growth in Nigeria. The result encouraged further analysis into other countries in Africa in the fourth chapter. Still on the role of banks, the fifth chapter deals with the level of efficiency of the banks in Africa while the book is concluded in the sixth chapter.
Author: Abdulsalam Abubakar
Publisher:
ISBN:
Category : Economic development
Languages : en
Pages : 538
Get Book Here
Book Description
The role of financial development to influence the capital accumulation, productivity and hence economic growth, has continued to take a centre stage in the economic growth literature. The apparent low level of economic performance of the Economic Community of West African States (ECOWAS) region, low physical and human capital accumulations and low productivity have raised issues about the role of financial development to the economic growth process of the region and serve as the motivation of this study. The study investigates the impact of financial development on the output of eleven ECOWAS member states over the period from 1980 to 2011. The determinants of financial development in ECOWAS from 1996 to 2011 period are also examined. The study employs panel cointegration techniques, which involve panel cointegration tests by Pedroni (2000; 2004) and Kao (1999) and two panel cointegration estimators, namely; the fully modified OLS (FMOLS) and dynamic OLS (DOLS). Furthermore, the study adopts the Dumitrescu-Hurlin (2012) panel causality test to determine the causal relationship between financial development and output in ECOWAS. The findings show that broad money and financial sector deposits have negative and significant impact on the output, as found by Hakeem (2010) in sub-Saharan African region. On the other hand, banking sector deposits, domestic credit, bank credit and the ratio of bank credit to bank deposits are found to have positive and significant impact on output in ECOWAS. This is consistent with the findings of Ndebbio (2003) and Gaye (2013). These effects are largely transmitted through the physical capital accumulation channel, as found by Rioja and Valev (2003) in developing countries. The empirical evidence further shows that whereas unidirectional causality runs from GDP to broad money and bank deposits, the reverse is the case for bank credit and ratio of bank credit to bank deposits. Similarly, bidirectional causality is found to exist between financial sector deposit and domestic credit on one hand, and GDP on the other hand. These findings are consistent with that of Bangke and Eggoh (2010). For determinants of financial development, inflation, institutional quality and current account openness are found to be the major determinants of financial depth. While financial intermediation activities are determined by a combination of the previous factors and the level of income and human capital accumulation. These findings largely explain the connection between lack of access to finance by a larger segment of the household and private sectors in the ECOWAS and the low levels of output in the region. Hence, the major policy implications are that financial policies in the region should aim at eliminating and/or mitigating factors that hinder access to finance. These can be achieved through, economic, legal, political and other institutional reforms, which can also enhance financial development in the region and position it to better serve the real economy.
