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Financial Development and Economic Growth: Evidence from Low-Income Nations in the SADC Region

Author

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  • Courage Mlambo

    (Faculty of Commerce, Independent Institute of Education, Johannesburg 1724, South Africa)

Abstract

The study sought to examine the relationship between financial development and economic growth in low-income nations in the SADC region. Motivated by the observation that numerous states in the SADC region lack adequately developed financial systems, this investigation was undertaken. Many SADC states are low-income countries, and they remain financially underdeveloped, which could compromise their growth prospects. The analysis was quantitative in nature, and used panel data to achieve its objectives. The data period spanned from 2000 to 2022. The dynamic common correlated effects (DCCE) technique was used for estimation purposes. Results showed that there is a positive relationship between financial development and economic growth. The relationship was also found to be causal: financial development is not only a result of economic growth; it also influences growth. The evidence from the findings supports the notion that financial development is needed to increase the effectiveness of resource allocation and consequently promote growth. This calls on the governments in the countries under investigation to create environments that foster financial development.

Suggested Citation

  • Courage Mlambo, 2024. "Financial Development and Economic Growth: Evidence from Low-Income Nations in the SADC Region," IJFS, MDPI, vol. 12(3), pages 1-16, June.
    • Handle: RePEc:gam:jijfss:v:12:y:2024:i:3:p:62-:d:1423715
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    Cited by:

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    2. Geoffrey Gatharia Gachino, 2025. "Does Financial Development Shape the Energy–FDI–Growth Nexus? New Evidence from BRICS+ Countries Using Dynamic Panel Estimation," IJFS, MDPI, vol. 13(3), pages 1-24, September.
    3. Ilarslan Kenan & Yıldız Münevvere, 2025. "The Asymmetric Effect of Financial Development on Economic Growth: Empirical Evidence from Lower and Upper Middle Income Countries," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 18(4), pages 491-509.
    4. Boulenouar Ilias Zakaria Mennad & Anes Meskini & Amina Benhaddou, 2025. "Between Finance and Growth: The Role of Financial Development in Promoting Economic growth in Africa," Finance, Accounting and Business Analysis, University of National and World Economy, Institute for Economics and Politics, vol. 7(1), pages 99-108, June.

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