Economics at your fingertips  

The Long‐run and Short‐run Effects of Foreign Direct Investment on Financial Development in African Countries

Henri Njangang (), Nembot Ndeffo Luc and Nawo Larissa

African Development Review, 2019, vol. 31, issue 2, 216-229

Abstract: This paper contributes to the understanding of the other neglected effects of foreign direct investment (FDI) by analysing how FDI affects financial development in the short run and long run for a panel of 49 African countries over the period 1990–2016. The empirical evidence is based on a pooled mean group approach. With three panels differentiated by income level, the following findings are established: first, while there is a positive and significant long‐run relationship between FDI and financial development in Africa, in the short run the effect of FDI on financial development is negative. Second, the effect of FDI is positive and significant in the long run in the three sub‐samples. However, in the short run, the effect of FDI is negative and significant in lower‐income countries and non‐significant in lower‐middle‐income and upper‐middle‐income countries. Overall we find strong evidence supporting the view that FDI promotes financial development in African countries in the long run.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
Working Paper: The long-run and short-run effects of foreign direct investment on financial development in African countries (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1017-6772

Access Statistics for this article

African Development Review is currently edited by John C. Anyanwu, Hassan Aly and Kupukile Mlambo

More articles in African Development Review from African Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2020-07-24
Handle: RePEc:bla:afrdev:v:31:y:2019:i:2:p:216-229