IDEAS home Printed from https://ideas.repec.org/a/aic/revebs/y2010i5abun.html
   My bibliography  Save this article

Saving-Economic Growth Nexus In Nigeria, 1970-2007: Granger Causality And Co-Integration Analyses

Author

Listed:
  • Nurudeen ABU

    () (Department of Economics, University of Abuja, PMB 117, Abuja-Nigeria,)

Abstract

The controversy surrounding the direction of causality between saving and economic growth motivated this study. The author employed the Granger-causality and co-integration techniques to analyze the relationship between saving and economic growth in Nigeria during the period 1970-2007. The Johansen co-integration test indicates that the variables (economic growth and saving) are co-integrated, and that a long-run equilibrium exists between them. In addition, the granger causality test reveals that causality runs from economic growth to saving, implying that economic growth precedes and granger causes saving. Thus, we reject the Solow’s hypothesis that saving precedes economic growth, and accept the Keynesian theory that t is economic growth that leads to higher saving. The author recommends that government and policy makers should employ policies that would accelerate economic growth so as to increase saving.

Suggested Citation

  • Nurudeen ABU, 2010. "Saving-Economic Growth Nexus In Nigeria, 1970-2007: Granger Causality And Co-Integration Analyses," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 5, pages 93-104, June.
  • Handle: RePEc:aic:revebs:y:2010:i:5:abun
    as

    Download full text from publisher

    File URL: http://rebs.ro/resource/REBS_5/Focus%20On%20Economic%20Development%20In%20Africa/Abu,N%20%97%20Saving-Economic%20Growth%20Nexus%20In%20Nigeria,1970-2007%20Granger%20Causality%20And%20Co-Integration%20Analyses.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Stiroh, Kevin J. & Rumble, Adrienne, 2006. "The dark side of diversification: The case of US financial holding companies," Journal of Banking & Finance, Elsevier, vol. 30(8), pages 2131-2161, August.
    2. Jagtiani, Julapa & Nathan, Alli & Sick, Gordon, 1995. "Scale economies and cost complementarities in commercial banks: On-and off-balance-sheet activities," Journal of Banking & Finance, Elsevier, vol. 19(7), pages 1175-1189, October.
    3. Grifell-Tatje, E. & Lovell, C. A. K., 1997. "The sources of productivity change in Spanish banking," European Journal of Operational Research, Elsevier, vol. 98(2), pages 364-380, April.
    4. Avkiran, Necmi Kemal, 1999. "The evidence on efficiency gains: The role of mergers and the benefits to the public," Journal of Banking & Finance, Elsevier, vol. 23(7), pages 991-1013, July.
    5. Berger, Allen N. & Hasan, Iftekhar & Zhou, Mingming, 2009. "Bank ownership and efficiency in China: What will happen in the world's largest nation?," Journal of Banking & Finance, Elsevier, vol. 33(1), pages 113-130, January.
    6. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    7. Stiroh, Kevin J., 2000. "How did bank holding companies prosper in the 1990s?," Journal of Banking & Finance, Elsevier, vol. 24(11), pages 1703-1745, November.
    8. Canhoto, Ana & Dermine, Jean, 2003. "A note on banking efficiency in Portugal, New vs. Old banks," Journal of Banking & Finance, Elsevier, vol. 27(11), pages 2087-2098, November.
    9. Ihsan Isik & M. Kabir Hassan, 2003. "Efficiency, Ownership and Market Structure, Corporate Control and Governance in the Turkish Banking Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(9-10), pages 1363-1421.
    10. Miller, Stephen M. & Noulas, Athanasios G., 1996. "The technical efficiency of large bank production," Journal of Banking & Finance, Elsevier, vol. 20(3), pages 495-509, April.
    11. Douglas D. Evanoff & Philip R. Israilevich, 1991. "Productive efficiency in banking," Economic Perspectives, Federal Reserve Bank of Chicago, issue Jul, pages 11-32.
    12. Barbara Casu & Claudia Girardone, 2005. "An analysis of the relevance of off-balance sheet items in explaining productivity change in European banking," Applied Financial Economics, Taylor & Francis Journals, vol. 15(15), pages 1053-1061.
    13. Allen, Franklin & Santomero, Anthony M., 2001. "What do financial intermediaries do?," Journal of Banking & Finance, Elsevier, vol. 25(2), pages 271-294, February.
    14. Noulas, Athanasios G & Ray, Subhash C & Miller, Stephen M, 1990. "Returns to Scale and Input Substitution for Large U.S. Banks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 22(1), pages 94-108, February.
    15. Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-1266, September.
    16. Ariff, Mohamed & Can, Luc, 2008. "Cost and profit efficiency of Chinese banks: A non-parametric analysis," China Economic Review, Elsevier, vol. 19(2), pages 260-273, June.
    17. DeYoung, Robert & Roland, Karin P., 2001. "Product Mix and Earnings Volatility at Commercial Banks: Evidence from a Degree of Total Leverage Model," Journal of Financial Intermediation, Elsevier, vol. 10(1), pages 54-84, January.
    18. Emili Tortosa-Ausina, 2003. "Bank cost efficiency as distribution dynamics: controlling for specialization is important," Investigaciones Economicas, Fundación SEPI, vol. 27(1), pages 71-96, January.
    19. Pang-tien Lieu & Tsai-lien Yeh & Yung-ho Chiu, 2005. "Off-balance sheet activities and cost inefficiency in Taiwan's Banks," The Service Industries Journal, Taylor & Francis Journals, vol. 25(7), pages 925-944, October.
    20. Chen, Xiaogang & Skully, Michael & Brown, Kym, 2005. "Banking efficiency in China: Application of DEA to pre- and post-deregulation eras: 1993-2000," China Economic Review, Elsevier, vol. 16(3), pages 229-245.
    21. Dyson, R. G. & Allen, R. & Camanho, A. S. & Podinovski, V. V. & Sarrico, C. S. & Shale, E. A., 2001. "Pitfalls and protocols in DEA," European Journal of Operational Research, Elsevier, vol. 132(2), pages 245-259, July.
    22. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    23. Aly, Hassan Y, et al, 1990. "Technical, Scale, and Allocative Efficiencies in U.S. Banking: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 211-218, May.
    24. Bauer, Paul W. & Berger, Allen N. & Ferrier, Gary D. & Humphrey, David B., 1998. "Consistency Conditions for Regulatory Analysis of Financial Institutions: A Comparison of Frontier Efficiency Methods," Journal of Economics and Business, Elsevier, vol. 50(2), pages 85-114, March.
    25. Fadzlan Sufian, 2008. "Revenue shifts and non-bank financial institutions' productivity: Empirical evidence from Malaysia," Studies in Economics and Finance, Emerald Group Publishing, vol. 25(2), pages 76-92, June.
    26. Jagtiani, Julapa & Khanthavit, Anya, 1996. "Scale and scope economies at large banks: Including off-balance sheet products and regulatory effects (1984-1991)," Journal of Banking & Finance, Elsevier, vol. 20(7), pages 1271-1287, August.
    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


    Cited by:

    1. Piotr Misztal, 2011. "The Relationship Between Savings And Economic Growth In Countries With Different Level Of Economic Development," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 7(2), pages 17-29, August.
    2. Abdelhafidh, Samir, 2013. "Potential financing sources of investment and economic growth in North African countries: A causality analysis," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 150-169.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aic:revebs:y:2010:i:5:abun. 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: (Sireteanu Napoleon-Alexandru). General contact details of provider: http://edirc.repec.org/data/feaicro.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.