Advanced Search
MyIDEAS: Login to save this paper or follow this series

Does financial sector development cause investment and growth? empirical analysis of the case of Ghana

Contents:

Author Info

  • Adam, Anokye M.
  • Siaw, Frimpong

Abstract

This article examines whether financial sector development has ‘caused’ economic growth and investment in Ghana between 1970 and 2007. As a proxy for financial sector development we use credit to private sector as per cent of GDP, bank liquid reserve – asset ratio and liquid liability as a per cent of GDP. We use GDP growth as a proxy for economic growth and real domestic investment for investment growth. The dynamic interactions between the growth of real Per capita Gross Domestic Product, real domestic investment and indicators of financial sector development are investigated using the concept of Granger Causality after testing for cointegration using Johansen techniques. The empirical results obtained by the Johansen method suggest the existence of a stable long-run relationship between growth rate and financial sector development indicators identified in the study. The same is true for investment growth. However, with the exception of credit to private sector where the causality runs from economic growth only, we find bidirectional causality between economic growth and financial sector development indicators. For investment growth, the causality runs from investment growth to financial sector indicators except between investment growth and Liquid liability where bidirectional causality recorded. The article establishes that, in an overall sense, economic and investment have ‘caused’ financial sector development in Ghana

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://mpra.ub.uni-muenchen.de/39634/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39634.

as in new window
Length:
Date of creation: 2010
Date of revision:
Publication status: Published in Journal of Business and Enterprise Development 1.2(2010): pp. 67-84
Handle: RePEc:pra:mprapa:39634

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Economic growth; financial sector development; Cointegration; Granger- Causality;

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. Maurice Obstfeld., 1993. "Risk-Taking, Global Diversification, and Growth," Center for International and Development Economics Research (CIDER) Working Papers C93-016, University of California at Berkeley.
  2. Koivu, Tuuli, 2002. "Do efficient banking sectors accelerate economic growth in transition countries," BOFIT Discussion Papers 14/2002, Bank of Finland, Institute for Economies in Transition.
  3. Drakos, Kostas, 2003. "Assessing the success of reform in transition banking 10 years later: an interest margins analysis," Journal of Policy Modeling, Elsevier, vol. 25(3), pages 309-317, April.
  4. van Wijnbergen, Sweder, 1983. "Credit policy, inflation and growth in a financially repressed economy," Journal of Development Economics, Elsevier, vol. 13(1-2), pages 45-65.
  5. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
  6. Akinlo, A. Enisan, 2004. "Foreign direct investment and growth in Nigeria: An empirical investigation," Journal of Policy Modeling, Elsevier, vol. 26(5), pages 627-639, July.
  7. Valeriano F. García & Lin Liu, 1999. "Macroeconomic Determinants of Stock Market Development," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 29-59, May.
  8. Tuuli Koivu, 2002. "Do efficient banking sectors accelerate economic growth in transition countries?," Macroeconomics 0212013, EconWPA.
  9. Dwight Jaffee & Mark Levonian, 2001. "The Structure of Banking Systems in Developed and Transition Economies," European Financial Management, European Financial Management Association, vol. 7(2), pages 161-181.
  10. Johansen, Soren, 1992. "Cointegration in partial systems and the efficiency of single-equation analysis," Journal of Econometrics, Elsevier, vol. 52(3), pages 389-402, June.
  11. Cheung, Yin-Wong & Ng, Lilian K., 1998. "International evidence on the stock market and aggregate economic activity," Journal of Empirical Finance, Elsevier, vol. 5(3), pages 281-296, September.
Full references (including those not matched with items on IDEAS)

Citations

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:pra:mprapa:39634. 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: (Ekkehart Schlicht).

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.