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Financial development and private investment in Sub-Saharan Africa

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  • Misati, Roseline Nyakerario
  • Nyamongo, Esman Morekwa
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    Abstract

    This study examines the relationship between financial sector development and private investment in Sub-Saharan Africa. It uses panel data covering the period 1991–2004 from 18 countries in Africa. The main findings of the study are as follows: there is a negative relationship between interest rate and private investment, signaling large interest rate spreads in African economies. It is also found that both the credit to the private sector and the turnover ratio have significant relationships with private investment. However, the effect of turnover ratio on investment is insignificant. The insignificance of the stock market indicator reflects the low stage of stock market development in most of the African economies. In addition, it is found that the informal sector is still large and has positive effects on private investment and that institutional variables play a key role in determining the level of private investment in Africa.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economics and Business.

    Volume (Year): 63 (2011)
    Issue (Month): 2 ()
    Pages: 139-151

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    Handle: RePEc:eee:jebusi:v:63:y:2011:i:2:p:139-151

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    Web page: http://www.elsevier.com/locate/jeconbus

    Related research

    Keywords: Financial development; Private investment; Panel Data; Africa;

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    Cited by:
    1. Nyamongo, Esman Morekwa & Misati, Roseline N. & Kipyegon, Leonard & Ndirangu, Lydia, 2012. "Remittances, financial development and economic growth in Africa," Journal of Economics and Business, Elsevier, vol. 64(3), pages 240-260.
    2. Abida Zouheir & Imen Mohamed Sghaier, 2014. "Remittances, Financial Development and Economic Growth: The Case of North African Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 17(51), pages 137-170, March.
    3. Misati, Roseline Nyakerario & Nyamongo, Esman Morekwa, 2012. "Financial liberalization, financial fragility and economic growth in Sub-Saharan Africa," Journal of Financial Stability, Elsevier, vol. 8(3), pages 150-160.

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