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Domestic public debt and financial development in Sub-Saharan Africa: Is there an inverted-U relationship?

Author

Listed:
  • Walid Benayed

    (Higher Institute of Management of Gabes, University of Gabes, Tunisia)

  • Foued Badr Gabsi

    (Faculty of Economics and Management of Sfax, University of Sfax, Tunisia)

Abstract

This paper assesses the nonlinear effect of domestic public debt on financial development using a panel of 20 low-income Sub-Saharan African countries over the period 2000-2010. Based on the framework proposed by Lind and Mehlum (2010), our analysis confirms the existence of an inverted-U relationship between domestic public debt and bank credit to the private sector with a threshold of about 52 % of GDP. The regression results are robust across different specifications and diverse estimation techniques.

Suggested Citation

  • Walid Benayed & Foued Badr Gabsi, 2020. "Domestic public debt and financial development in Sub-Saharan Africa: Is there an inverted-U relationship?," Economics Bulletin, AccessEcon, vol. 40(1), pages 846-854.
    • Handle: RePEc:ebl:ecbull:eb-19-00678
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    References listed on IDEAS

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    Cited by:

    1. Bayar, Yilmaz & Sakar, Emre, 2021. "Impact of Domestic Public Borrowing on Financial Development: Evidence from EU Transition Economies," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 28(1).
    2. Walid Benayed & Nouha Bougharriou & Foued Badr Gabsi, 2020. "The threshold effect of political institutions on the finance-growth nexus: Evidence from Sub-Saharan Africa," Economics Bulletin, AccessEcon, vol. 40(3), pages 2484-2493.
    3. Qamar ABBAS & Muhammad RAMZAN & Sumbal FATIMA, 2022. "Financial development and public debt. Estimating the role of institutional quality," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(632), A), pages 5-26, Autumn.

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    More about this item

    Keywords

    domestic public debt; financial development; an inverted-U relationship; panel data.;
    All these keywords.

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt

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