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The Causal Nexus between Financial Development and Economic Growth in Kenya

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  • Uddin, Gazi Salah
  • Sjö, Bo
  • Shahbaz, Muhammad

Abstract

This paper aims to reexamine the relationship between financial development and economic growth in Kenya over the period of 1971-2011. Since, financial sector plays a vital role in mobilizing and allocating savings into productive ventures, the core issue of this investigation remains important for developing economics. The examination is based on a Cobb-Douglas production augmented by incorporating financial development. A simulation based ARDL bounds testing and Gregory and Hansen’s structural break cointegration approaches are being utilized in this study. Cointegration is being found between the series in the presence of a structural break in 1992. It is also being established that, in the long run, development of financial sector has positive impact on economic growth. Here remains an important policy implication for the concerned individuals of Kenya, that is, they may emphasize on financial development to ignite economic growth.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 49262.

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Date of creation: 03 Aug 2013
Date of revision: 23 Aug 2013
Handle: RePEc:pra:mprapa:49262

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Keywords: Economic Growth; Financial Development; Kenya;

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Citations

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Cited by:
  1. Frédéric Teulon, 2014. "Une vision optimiste de la croissance est-elle de mise ?," Working Papers, Department of Research, Ipag Business School 2014-490, Department of Research, Ipag Business School.
  2. Uddin, Gazi Salah & Shahbaz, Muhammad & AROURI, Mohamed El Hedi, 2013. "Financial Development and Poverty Reduction Nexus:A Cointegration and Causality Analysis in Bangladesh," MPRA Paper 49264, University Library of Munich, Germany, revised 23 Aug 2013.
  3. Tsangyao Chang & Hsiao-Ping Chu & Frederick W. Deale & Rangan Gupta, 2014. "The Relationship between Population Growth and Economic Growth Over 1870-2013: Evidence from a Bootstrapped Panel-Granger Causality Test," Working Papers, Department of Research, Ipag Business School 2014-477, Department of Research, Ipag Business School.
  4. Phouphet KYOPHILAVONG & Gazi Salah Uddin & Muhammad Shahbaz, 2014. "The Nexus Between Financial Development and Economic Growth in Laos," Working Papers, Department of Research, Ipag Business School 2014-447, Department of Research, Ipag Business School.
  5. Rangan Gupta & Lardo Stander, 2014. "Endogenous Fluctuations in an Endogenous Growth Model with Inflation Targeting," Working Papers 201432, University of Pretoria, Department of Economics.
  6. Anis Omri & Amel Sassi-Tmar, 2014. "Linking FDI inflows to economic growth in North African countries," Working Papers, Department of Research, Ipag Business School 2014-558, Department of Research, Ipag Business School.
  7. Frederic Teulon, 2014. "Robert Solow, à la recherche des causes de croissance," Working Papers, Department of Research, Ipag Business School 2014-554, Department of Research, Ipag Business School.
  8. Frederic Teulon, 2014. "Paul Romer et la dynamique de la croissance," Working Papers, Department of Research, Ipag Business School 2014-563, Department of Research, Ipag Business School.
  9. Shahbaz, Muhammad & Ur Rehman, Ijaz, 2013. "Multivariate–Based Granger Causality between Financial Deepening and Poverty: The Case of Pakistan," MPRA Paper 50834, University Library of Munich, Germany, revised 20 Oct 2013.
  10. Chaker Aloui & Besma Hkiri & Duc Khuong Nguyen & Hela Ben Hamida, 2014. "Real growth co-movements among the GCC+2 countries: Evidence from timefrequency analysis," Working Papers, Department of Research, Ipag Business School 2014-568, Department of Research, Ipag Business School.
  11. Kyophilavong, Phouphet & Salah Uddin, Gazi & Shahbaz, Muhammad, 2014. "The Nexus Between Financial Development and Economic Growth in Lao PDR," MPRA Paper 57308, University Library of Munich, Germany, revised 14 Jul 2014.
  12. Anis Omri & Duc Khuong Nguyen & Christophe Rault, 2014. "Causal interactions between CO2 emissions, FDI, and economic growth: Evidence from dynamic simultaneousequation models," Working Papers, Department of Research, Ipag Business School 2014-542, Department of Research, Ipag Business School.
  13. Anis Omri & Bassem kahouli, 2014. "The nexus between foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region," Working Papers, Department of Research, Ipag Business School 2014-557, Department of Research, Ipag Business School.

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