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Banking development and economic growth: a time-series evidence from Namibia

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  • Misheck Mutize
  • Colin Diergaardt
  • Latif Alhassan

Abstract

This study applies Granger causality test under the VECM framework on banking development indicators over the period 1991 to 2018, to examine the relationship between banking development and economic growth in Namibia. Results of the error correction model suggest a long-run relationship between banking development and economic growth, while there are no signs of short-run associations among the variables. Results of the Granger causality test indicate a lagged bidirectional causality between banking development and economic growth. These findings are consistent with the neoclassical theory of interest rate, which pronounces that interest rates are determined by the demand and the supply of loanable funds. This study thus recommends that Namibian banks reform credit policies and decrease the cost of debt to make more credit available to the private sector to sustain and stimulate economic growth.

Suggested Citation

  • Misheck Mutize & Colin Diergaardt & Latif Alhassan, 2026. "Banking development and economic growth: a time-series evidence from Namibia," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 11(1), pages 40-57.
    • Handle: RePEc:ids:ajesde:v:11:y:2026:i:1:p:40-57
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