Does financial structure matter for economic growth: evidence from South Africa

M A Guei

Economics Bulletin, 2019, vol. 39, issue 3, 1941-1957

Abstract: Policy makers have argued about the role of financial structure on economic growth. The bank-based, the market-based, and the financial services view are the three competing views of financial structure. Stock market development and the banking sector are regarded as avenues through which growth can be supported by providing liquidity for firm financing. Hence establishing the contribution of the financial structure on economic performance in South Africa is of crucial importance to policy makers and government officials. The study utilizes the autoregressive distributed lag model for econometric estimation. The data set covers the period 1975-2016. The results do not indicate a clear relationship between financial structure and economic growth in South Africa. The findings do not support the view that government should place an emphasis on improving one financial system (market-based system) as opposed to another (bank-based system). The contribution to the existing literature is that the results do not support the bank-based or the market-based system. A possible extension of the study will be to investigate the impact of the financial structure using household sectors (ratios of deposits, insurance, pensions, shares and other securities to GDP) on economic growth.

Keywords: Economic growth; Financial structure; Autoregressive distributed lag model. (search for similar items in EconPapers)
JEL-codes: E6 O4 (search for similar items in EconPapers)
Date: 2019-08-27
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Related works:
Working Paper: Does financial structure matter for economic growth: An evidence from South Africa (2018)
Working Paper: Revenue, Welfare and Trade Effects of European Union Free Trade Agreement on South Africa (2017)
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