 Domestic Debt, Private Sector Credit and Economic Growth in Sub-Saharan AfricaAfrican Development Review, 2013, vol. 25, issue 4, 434–446 Abstract: Exercising fiscal prudence in periods of deteriorating fiscal balance requires sound policies which promote debt sustainability. This paper estimates a dynamic cross-country model and investigates the impact of domestic debt on economic growth and private sector credit in a panel of 21 sub-Saharan African (SSA) countries over the period 1985 to 2010. System-GMM results reveal a non-linear relationship between domestic debt and economic growth, characterized by a maximum turning point of 11.4 per cent of GDP. In addition, domestic debt is found to crowd out private sector credit by an elasticity of negative 0.3 per cent of GDP, deterring capital accumulation and private sector growth. These findings underscore the need for effective debt management strategies which incorporate debt ceiling to limit domestic indebtedness, as well as the design of financial policies which enhance credit availability, promote fiscal discipline and deepen domestic debt markets on the continent. Date: 2013 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:adb:adbadr:2084 Ordering information: This journal article can be ordered from Access Statistics for this article African Development Review is currently edited by Adeleke Oluwole Salami More articles in African Development Review from African Development Bank African Development Bank Group, Avenue Joseph Anoma, 01 BP 1387 Abidjan 01, Côte d'Ivoire. Contact information at EDIRC. |
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