Financial structure and economic growth link in African countries: a panel cointegration analysis
Abdullahi Ahmed and
Journal of Economic Studies, 2011, vol. 38, issue 3, 331-357
Purpose - This paper aims to use the newly developed panel data cointegration analysis and the dynamic time series modeling approach to examine the linkages between financial structure (market-based vs bank-based) and economic growth in African economies. Design/methodology/approach - The research investigates the dynamic relationship between financial structure and economic growth in a panel of a group of seven African developing countries over the period of 1986-2007. The paper uses various indicators/measures of financial structure and financial system, and employs the traditional time-series analysis for causality as well as the newly developed panel unit root and cointegration techniques and estimated finance-growth relationship using FMOLS for heterogeneous panel. Findings - From the dynamic heterogeneous panel approach, the paper firstly finds that market-based financial system is important for explaining output growth through enhancing efficiency and productivity. Second, the authors' empirical evidence supports the view that higher levels of banking system development are positively associated with capital accumulation growth and lead to faster rates of economic growth. Originality/value - Panel cointegration, group mean panel FMOLS and country-by-country time series investigations indicate that the market-based financial system is important for explaining output growth through enhancing efficiency and productivity, whereas the development of banking system is significantly associated with capital accumulation growth. Further results from the time-series approach show evidence of unidirectional causality running from market-oriented as well as bank-oriented financial systems to economic growth.
Keywords: Financial structure; Sub Saharan Africa; Panel Cointegration; Economic growth (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed
Downloads: (external link)
http://www.emeraldinsight.com/10.1108/014435811111 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:v:38:y:2011:i:3:p:331-357
Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Access Statistics for this article
Journal of Economic Studies is currently edited by Professor Mohsen Bahmani-Oskooee
More articles in Journal of Economic Studies from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().