Financial development and economic growth : a comparative study between Cameroon and South Africa
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Authors
Djoumessi, Emilie Chanceline Kinfack
Issue Date
2009-04
Type
Dissertation
Language
en
Keywords
Financial development , Economic growth , Vector autoregression model , Co-integration test , Causality test , Auto-regressive distributed lag
Alternative Title
Abstract
The causal relationship between financial development and economic growth is a
controversial issue. For developing countries, empirical studies have provided mixed
result. This study seeks to empirically explore the relationship and the causal link
between financial development and economic growth in two sub-Saharan African
countries between 1970 and 2006. The empirical investigation is carried out using time
methods and the five most commonly used indicators of financial development in the
literature. However, the causal relationship was carried out using two different methods
which are the autoregressive distributed lag bounds testing (ARDL) and the vector error
correction model (VECM). Using this above methodology the study first found that in
both countries there is a positive and long-term relationship between all the indicators of
financial development and economic growth which was proxied by the real per capita
GDP. With respect to the causality test, the two methods used provide mixed results
especially in South Africa. In Cameroon the study found that financial development
causes economic growth using the two methods, whereas in South Africa economic
growth causes financial development when the VECM method is used, while there is an
independence relationship between the two variables in South Africa when using ARDL.
Description
Citation
Djoumessi, Emilie Chanceline Kinfack (2009) Financial development and economic growth : a comparative study between Cameroon and South Africa, University of South Africa, Pretoria, <http://hdl.handle.net/10500/2746>