Contents of the volume

2017, Volume 70 - Issue 1

ISSN: 2499-8265
RSS feed citation: At RePEc
Publication date: 01 February 2017

THE RELATIONSHIP BETWEEN SAVINGS AND ECONOMIC GROWTH AT THE DISAGGREGATED LEVEL

Lumengo Bonga-Bonga, Nomvuyo GUMA

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MONETARY POLICY TRANSMISSION OVER THE REAL SECTOR OF BANGLADESH ECONOMY: AN SVAR APPROACH

Abdur Rahman Forhad, Ghassem A. Homaifar, Abul Hasnat Muhammed Salimullah

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REMITTANCES AND FOREIGN AID AS SOURCES OF EXTERNAL DEVELOPMENT FINANCE: IMPACTS ON SAVINGS AND INVESTMENT IN POST-WAR LEBANON

Bassam Hamdar, Samer Nouayhid

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THE DYNAMIC CAUSAL LINKAGE BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM ETHIOPIA

Sheilla Nyasha, Yvonne Gwenhure, Nicholas M. Odhiambo

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TESTING FISCAL SUSTAINABILITY IN THE TRANSITION ECONOMIES OF EASTERN EUROPE: THE CASE OF POLAND (1999-2015)

Marco Tronzano

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Genoa Chamber of Commerce
Economia Internazionale / International Economics

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Corresponding author

Sheilla NYASHA, Department of Economics, University of South Africa, Pretoria, South Africa

Co-authors

Yvonne GWENHURE, University of South Africa, Dept of Economics, Pretoria South Africa

Nicholas M. ODHIAMBO, University of South Africa, Dept of Economics, Pretoria South Africa

The Dynamic Causal Linkage between Financial Development and Economic Growth: Empirical Evidence from Ethiopia

Pages

73-102

Abstract

This paper investigates the dynamic causal linkage between bank-based financial development and economic growth in Ethiopia during the period from 1980 to 2014. The study includes savings and investment as intermittent variables in an attempt to address the omission of variable bias – thereby creating a multivariate Granger-causality model. Using the newly developed autoregressive distributed lag bounds testing approach to cointegration and the error-correction model-based causality model, the study finds that in the short run, both financial development and economic growth Granger-cause each other in Ethiopia. However, in the long run, there is unidirectional Granger-causality from bank-based financial development to economic growth. The study, therefore, recommends that policies aimed at enhancing both economic growth and financial development should be pursued in the short run. However, in the long run, policies that target the development of the banking sector should be prioritised in order to ensure a sustained growth path.

JEL classification

G20, O10

Keywords

Ethiopia, Bank-Based Financial Development, Economic Growth, Granger-Causality

Index

  1. Introduction
  2. Bank-based financial development and economic growth in Ethiopia: an overview
  3. Literature review
  4. Estimation techniques
  5. Econometric analysis and empirical findings
  6. Conclusion

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