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Interest rate reforms, financial deepening and economic growth in Tanzania: a dynamic linkage

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  • Nicholas Odhiambo

Abstract

In this paper we examine the dynamic relationship between interest rate reforms and economic growth in Tanzania using two tests. In the first test, we examine the impact of interest rate reforms on financial deepening using a financial deepening model. In the second test, we examine whether the financial deepening, which results from interest rate reforms, Granger-causes economic growth - using a trivariate model. The empirical findings of our results reveal that there is a significant positive relationship between interest rate reforms and economic growth in Tanzania. However, the results fail to find any support for finance-led growth.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 13 (2010)
Issue (Month): 2 ()
Pages: 201-212

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Handle: RePEc:taf:jpolrf:v:13:y:2010:i:2:p:201-212

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Keywords: Africa; Tanzania; interest rate reforms; financial depth; economic growth;

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Cited by:
  1. Nicholas Odhiambo, 2009. "Interest Rate Liberalization and Economic Growth in Zambia: A Dynamic Linkage," African Development Review, African Development Bank, vol. 21(3), pages 541-557.

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