 Financial Development and Investment in Botswana: A Multivariate Causality TestBrian Muyambiri and Nicholas Odhiambo Folia Oeconomica Stetinensia, 2018, vol. 18, issue 2, 72-89 Abstract: This paper examines the causal relationship between financial development and investment in Botswana between 1976 and 2014. The autoregressive distributed-lag (ARDL) bounds testing approach and a trivariate Granger-causality model are employed. In order to capture the breadth and depth of the financial sector in the study country, both bank- and market-based financial development indices are used. The results show that there is a bidirectional Granger-causal relationship between both bank-based and market-based financial development and investment in the short run. In the long run, a distinct causal flow is found to prevail only from investment to bank-based financial development. Given the findings, the causal relationship between financial development and investment is not a given as implied in economic literature. For Botswana, policies that enhance both investment and market-based financial development should be employed in the short run. Keywords: financial development; investment; trivariate granger causality; Botswana (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:vrs:foeste:v:18:y:2018:i:2:p:72-89:n:6 Access Statistics for this article Folia Oeconomica Stetinensia is currently edited by Waldemar Tarczyński More articles in Folia Oeconomica Stetinensia from Sciendo |
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