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Financial Globalization and Economic Growth in Sub‐Saharan Africa: Evidence from Panel Cointegration Tests
Author(s) -
Egbetunde Tajudeen,
Akinlo Anthony Enisan
Publication year - 2015
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.12140
Subject(s) - cointegration , globalization , economics , unit root , multivariate statistics , financial globalization , panel data , test (biology) , macroeconomics , economic globalization , unit root test , development economics , econometrics , market economy , statistics , mathematics , paleontology , biology
This paper examines the long‐run relationship between financial globalization and economic growth in sub‐Saharan Africa using panel unit root tests, panel cointegration tests and panel multivariate ECM. The study finds that the variables are stationary at first difference — I(1). Also, the results reveal that all the variables are cointegrated, that is, they are related in the long run. The results of the ECT test within the framework of panel multivariate ECM confirm the cointegration tests. The paper concludes that there is a long‐run relationship between financial globalization and economic growth in sub‐Saharan Africa. The paper argues that sub‐Saharan African economies will benefit from the era of financial globalization in the long run in as much as the governments promote and encourage sound macroeconomic policies and strong institutions.