Advanced Search
MyIDEAS: Login

Re-Examining The Finance-Growth Nexus: Structural Break, Threshold Cointegration And Causality Evidence From The Ecowas

Contents:

Author Info

  • Loesse Jacques Esso

    ()
    (Ecole Nationale Superieure de Statistique et d Economie Appliquee)

Abstract

The aim of this paper is to re-examine the cointegrating and causal relationship between financial development and economic growth in the ECOWAS. To this end, we use the Gregory and Hansen (1996a, 1996b) approach to cointegration with structural change and the procedure for non-causality test of Toda and Yamamoto (1995). Data are from the World Bank (2007) and cover the period 1960-2005. We show that there is a long-run relationship between financial development and economic growth in six countries, namely, Burkina Faso, Cape Verde, Cote d¡¯Ivoire, Ghana, Liberia and Sierra Leone. In addition, we show that financial development ¡®leads¡¯ economic growth in Ghana and Mali while growth causes finance in Burkina Faso, Cote d'Ivoire and Sierra Leone, and a bidirectional causality in Cape Verde and Liberia. The policy implication is that Cape Verde, Ghana and Mali should give policy priority to financial reform while Burkina Faso, Cote d¡¯Ivoire and Sierra Leone should promote economic growth.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.jed.or.kr/full-text/35-3/3.pdf
Download Restriction: no

Bibliographic Info

Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 35 (2010)
Issue (Month): 3 (September)
Pages: 57-79

as in new window
Handle: RePEc:jed:journl:v:35:y:2010:i:3:p:57-79

Contact details of provider:
Web page: http://www.jed.or.kr/
More information through EDIRC

Related research

Keywords: Threshold Cointegration; Financial Development; Granger Causality; Growth;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Allan w. Gregory & Bruce E. Hansen, 1992. "residual-Based Tests for Cointegration in Models with Regime Shifts," Working Papers 862, Queen's University, Department of Economics.
  2. Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2008. "Financial development and economic growth: The Egyptian experience," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 887-898.
  3. repec:pdn:wpaper:15 is not listed on IDEAS
  4. Enders, Walter & Falk, Barry, 1998. "Threshold-autoregressive, median-unbiased, and cointegration tests of purchasing power parity," International Journal of Forecasting, Elsevier, vol. 14(2), pages 171-186, June.
  5. Ahlin, Christian & Pang, Jiaren, 2008. "Are financial development and corruption control substitutes in promoting growth?," Journal of Development Economics, Elsevier, vol. 86(2), pages 414-433, June.
  6. Kim, Dukpa & Perron, Pierre, 2009. "Unit root tests allowing for a break in the trend function at an unknown time under both the null and alternative hypotheses," Journal of Econometrics, Elsevier, vol. 148(1), pages 1-13, January.
  7. Augustin Kwasi Fosu & Mwangi S. Kimenyi & Njuguna S. Ndung'u, 2003. "Economic Reforms and Restructuring in Sub-Saharan Africa: An Overview," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(Supplemen), pages 1-11, September.
  8. Hansen, Bruce E. & Seo, Byeongseon, 2002. "Testing for two-regime threshold cointegration in vector error-correction models," Journal of Econometrics, Elsevier, vol. 110(2), pages 293-318, October.
  9. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
  10. Badi H. Baltagi & Panicos O. Demetriades & Siong Hook Law, 2008. "Financial Development and Openness: Evidence from Panel Data," Center for Policy Research Working Papers 107, Center for Policy Research, Maxwell School, Syracuse University.
  11. Reinhart, Carmen & Tokatlidis, Ioannis, 2000. "Financial Liberalization: The African Experience," MPRA Paper 13423, University Library of Munich, Germany.
  12. Phillips, Peter C.B. & Toda, Hiro Y., 1993. "Limit Theory in Cointegrated Vector Autoregressions," Econometric Theory, Cambridge University Press, vol. 9(01), pages 150-153, January.
  13. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
  14. Panicos O. Demetriades & Khaled A.Hussein, 1995. "Does Financial Development Cause Economic Growth? Time-Series Evidence from 16 Countries," Keele Department of Economics Discussion Papers (1995-2001) 95/13, Department of Economics, Keele University.
  15. repec:ubc:bricol:91-31 is not listed on IDEAS
  16. Gregory, Allan W. & Nason, James M. & Watt, David G., 1996. "Testing for structural breaks in cointegrated relationships," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 321-341.
  17. Andrade, Philippe & Bruneau, Catherine & Gregoir, Stephane, 2005. "Testing for the cointegration rank when some cointegrating directions are changing," Journal of Econometrics, Elsevier, vol. 124(2), pages 269-310, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. HAMDI, Helmi & SBIA, Rashid & TAS, Bedri, 2012. "Financial deepening and economic growth in Gulf Cooperation Council countries," MPRA Paper 49907, University Library of Munich, Germany, revised 2012.
  2. Huiran Pan & Chun Wang, 2013. "Financial Development And Economic Growth: A New Investigation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(1), pages 27-46, March.
  3. Guido Baldi, 2013. "Physical And Human Capital Accumulation And The Evolution Of Income And Inequality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(3), pages 57-83, September.
  4. Oluwatosin Adeniyi & Festus O. Egwaikhide, 2013. "Saving-Investment Nexus In Developing Countries: Does Financial Development Matter?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 119-140, June.
  5. Chan, Tze-Haw & Lean, Hooi Hooi & Hooy, Chee Wooi, 2013. "A Macro Assessment of China Effects on Malaysian Exports and Trade Balances," MPRA Paper 48801, University Library of Munich, Germany, revised 01 Aug 2013.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:jed:journl:v:35:y:2010:i:3:p:57-79. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Changhui Kang).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.