Savings and financial sector development: panel cointegration evidence from Africa

Roger Kelly and George Mavrotas

The European Journal of Finance, 2008, vol. 14, issue 7, 563-581

Abstract: The paper uses different measures of financial sector development (FSD) for a dynamic heterogeneous panel of 17 African countries to examine the impact of FSD on private savings. An innovative econometric methodology is also employed related to a series of cointegration tests within a panel. This is an important contribution, since traditional panel data analysis adopted in previous studies suffers from serious heterogeneity bias problems. The empirical results obtained vary considerably among countries in the panel, thus highlighting the importance of using different measures of FSD rather than a single indicator. The evidence is rather inconclusive, although in most of the countries in the sample, a positive relationship between FSD and private savings seems to hold. The empirical analysis also suggests that a change in government savings is offset by an opposite change in private savings in most of the countries in the panel, thus confirming the Ricardian equivalence hypothesis. Liquidity constraints do not seem to play a vital role in most of the African countries in the group, since the relevant coefficient is negative and significant in only a small group of countries.

Keywords: financial sector development; private savings; panel cointegration tests; Africa (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/13518470801890602 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Savings and Financial Sector Development: Panel Cointegration Evidence from Africa (2002)
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: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:14:y:2008:i:7:p:563-581

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/REJF20

DOI: 10.1080/13518470801890602

Access Statistics for this article

The European Journal of Finance is currently edited by Chris Adcock

More articles in The European Journal of Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().