Open AccessFinancial development and economic growth: literature survey and empirical evidence from sub-Saharan African countries
Author(s) -
Songül Kakilli Acaravcı,
İlhan Öztürk,
Ali Acaravcı
Publication year - 2011
Publication title -
suid-afrikaanse tydskrif vir ekonomiese en bestuurswetenskappe/south african journal of economic and management sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.277
H-Index - 17
eISSN - 2222-3436
pISSN - 1015-8812
DOI - 10.4102/sajems.v12i1.258
Subject(s) - nexus (standard) , causality (physics) , economics , per capita , panel data , estimation , financial sector development , macroeconomics , empirical evidence , broad money , development economics , developing country , economic growth , econometrics , monetary policy , population , philosophy , physics , demography , management , epistemology , quantum mechanics , sociology , computer science , embedded system
In this paper we review the literature on the finance-growth nexus and investigate the causality between financial development and economic growth in Sub-Saharan Africa for the period 1975-2005. Using panel co-integration and panel GMM estimation for causality, the results of the panel co-integration analysis provide evidence of no long-run relationship between financial development and economic growth. The empirical findings in the paper show a bi-directional causal relationship between the growth of real GDP per capita and the domestic credit provided by the banking sector for the panels of 24 Sub-Saharan African countries. The findings imply that African countries can accelerate their economic growth by improving their financial systems and vice versa