Financial Deepening and Economic Growth in Jamaica (original) (raw)
Related papers
2013
The study investigates the impact of financial deepening on economic growth in Nigeria. The study examines the causal relationship between financial deepening and Economic Growth in Nigeria for the period 1990-2011. The stationarity properties of the data and the order of integration of the data were tested using both the Augmented Dickey-Fuller (ADF) test and the Phillip-Perron (PP) test. The variables tested stationary at first differences. The Johansen approach of cointegration was applied to test for the long-run relationship among the variables. The result indicated four (4) cointegrating relations between the variables; the Granger-causality suggests that there is unidirectional causality running from economic growth to financial deepening in Nigeria. The study concludes that financial deepening has an impact on economic growth in Nigeria. This implies that developing the financial sector in Nigeria, improves financial structures and ensures efficient delivery of financial ser...
Financial Deepening Indicators and Economic Growth in Nigeria: A Causality and Impact Analysis
This paper is a causality and impact study on financial deepening and economic growth in Nigeria for a-33-year period covering 1981 – 2013. The study used the Phillips-Peron test for unit root to ascertain whether the variables are stationary or not. The VEC residual normality test and the Histogram-Normality test were utilized in other to determine if the data set were normally distributed. Test for a long run relationship was conducted with the aid of the Johansen cointegration test. The Error Correction Model as well as the Granger causality test was also employed. The findings revealed that there is a long run relationship between economic growth, broad money supply and private sector credit, with high speed of adjustment towards long run equilibrium. The results also revealed that while broad money has positive and non-significant impact on economic growth, private sector credit has negative and non significant impact on growth. The Granger causality test results showed that neither broad money supply nor private sector credit is granger causal for economic growth and vice versa. The study therefore recommends that private sector friendly policies should be implemented to ensure that investors do not only have access to Original Research Article
Public and Municipal Finance, 2014
There is wide acceptance that pursuit of financial deepening that promotes the role of the private sector is good for developing countries. This paper applies alternative time series techniques, Engle-Granger two-step method and the Hendry's GETS method to estimate the long-run relationship between real per capita GDP, and a set of financial deepening indicators in Guyana over the period of 1960-2012. All techniques determine that there is a long-run equilibrium relationship in which a long-run positive and significant relationship exists between credit to private sector and per capita income growth; and a significant but mixed one for official development assistance. If sustainable per capita income growth is desired, measures to enhance institutional and organizational reforms in the socioeconomic and political sectors of Guyana must be encouraged.
Financial Sector Deepening and Economic Growth in Ghana
The purpose of this paper is to examine the effects of Financial Sector Development on Economic Growth in Ghana using the Johansen Co-integration analysis. The paper examines empirically the causal link between financial sector development and economic growth in Ghana. The Johansen Co-integration techniques within a bi-variate vector auto-regressive framework were used for the regression. Using a quarterly time series set of data on Ghana over a ten year period (2000 – 2009), the result of the study shows that, there is a statistically significant positive relationship between the Financial Sector Development and Economic Growth in Ghana. This outcome is in line with the results found for most of the literature reviewed. It is recommended that Government should encourage competition in the financial sector and micro finance development as these will improve and increase outreach and access to credit at a lower cost. This will boost private sector development and investments which is...
IOSR Journal of Economics and Finance, 2013
The paper reexamines the nexus between financial sector development and economic growth in Nigeria over the period 1970-2011. Prior to the study, most of the earlier works use financial deepening to proxy financial development and conclude that financial development do not cause growth. The paper seeks to investigate the hypothesis that financial development is positively related to growth. Using four measuresratios of broad money (MSY), bank deposit liabilities (BDY), domestic credit (DCY), private sector credit (PSY)-to proxy financial development, and adopting Granger causality tests in a VAR framework, the empirical result suggests that financial sector development is positively related to and therefore causes economic growth just as finance is growth dependent-a case of bi-directional causality. The variance decomposition shows that the variations in DCY and PSY are significantly and dominantly affected by MSY. This suggests, among others, that expansion of savings by DMBs through saver-oriented real deposit rate (RDR) translate to domestic credit with higher proportion utilized by the private sector. Among other measures, the establishment of a functional Asset Management Corporation should be hastened to free DMBs from non-performing loans and enhance their ability to expand private sector credits. Equally, to sustain the influence of finance on growth and vice versa, the current reforms in the financial sector should be sustained while focusing on complementary and coordinated institutional and structural reforms in the real sector to ensure simultaneity in the development of the financial and real sectors of the economy.
Causal Relationship between financial sector development and economic growth: a case of Zimbabwe
2015
This paper aims to investigate the impact of financial sector development on economic growth in Zimbabwe, the reason being that no such research has been carried out in Zimbabwe. The research utilized secondary data for the period 1995 to 2008.Granger causality test is used to test the causality between economic growth and four financial sector development indicators. Johansen co-integration approach is used to test the long run relationship between economic growth and financial sector development indicators. The paper found out that granger causality runs from economic growth to financial sector development. The results support some empirical evidence that postulates that the granger relationship runs from economic growth to financial development and is there is a positive relationship in the long run. The study provides empirical evidence that economic growth granger causes financial sector development and there are positively related in the long run. Therefore, it is important th...
2017
This paper investigates the dynamic causal linkage between bank-based financial development and economic growth in Ethiopia during the period from 1980 to 2014. The study includes savings and investment as intermittent variables in an attempt to address the omission of variable bias – thereby creating a multivariate Granger-causality model. Using the newly developed autoregressive distributed lag bounds testing approach to cointegration and the error-correction model-based causality model, the study finds that in the short run, both financial development and economic growth Granger-cause each other in Ethiopia. However, in the long run, there is unidirectional Granger-causality from bank-based financial development to economic growth. The study, therefore, recommends that policies aimed at enhancing both economic growth and financial development should be pursued in the short run. However, in the long run, policies that target the development of the banking sector should be prioriti...
International Journal of Financial Research, 2021
The desire to ascertain the kind of relationship between finance and growth is not new among scholars. This study attempted to give a better understanding of the type of relationship by analysing post-SAP (Structural Adjustment Programme) time-series data since the notable financial reforms began with SAP in Nigeria. The study employed the Johannsen Cointegration, error correction and granger causality as estimation techniques to determine the nexus between financial deepening and economic growth. The variables contained in the model include the ratio of credit to the private sector to gross domestic product (CPS) which proxy bank-based financial deepening, the proportion of market capitalisation to gross domestic product (MCAP) which proxy for stock market development. The result of the analysis revealed that the Nigerian economic growth is influenced by financial deepening positively and significantly, especially the bank-based financial depth.
Financial development and economic growth: cointegration and causality tests for 16 countries
1996
This paper assesses long-run causal relationship between financial development and economic growth for South Asian countries-India, Pakistan and Bangladesh for the period 1976-2008. Financial development emanates from financial systems that encourage financial stability and foster a framework for the implementation of successful economic polices. Financial Systems can be divided into ' bank-based'' and ' capital-market-based'' categories. Bank-based financial systems are the close involvement of their banks with industrial firms; banks are the most important source of finance for industry. Capital-market-based financial systems are characterized by highly developed capital markets and banks. Bank-based financial systems may be in a good position to implement successfully expansionary monetary policy and industrial strategy. Financial liberalisation and repression may show a positive association between financial development and economic growth. We conduct cointegrated vector autoregressive model to assess long-run relationship between financial development and economic growth. Empirical results imply a stable relationship between financial development and economic growth for these countries. Results of error correction models indicate Granger causality between financial development and economic growth running from financial development to economic growth.
Effect of Financial Deepening on Economic Growth in Nigeria: A Time Series Appraisal (1986-2018)
Asian Journal of Advanced Research and Reports, 2019
The influence of financial deepening on the economic growth of any nation cannot be underestimated. To this end, the study evaluated the effect of financial deepening on economic growth in Nigeria over a period of thirty three (33) years: 1986 to 2018. Data were collected from statistical bulletins of the Central Bank of Nigeria (CBN) and factbooks of the Nigerian Stock Exchange (NSE). The model estimation followed the Auto-regressive Distributive Lag (ARDL) approach with the effect estimated in line with the Granger Causality analysis. We found that economic growth in Nigeria is not affected by financial deepening. The study also stated that the level of growth in the economy is what influences the level of development in the banking sector. The implication is that the Central Bank of Nigeria and the Security and Exchange Commission (SEC) should formulate and implement policies geared toward the deepening of the banking sector and the capital markets to help in the efficient and ef...