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Financial development and growth nexus

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  • Phumla Mahlangu

Abstract

Purpose: This study investigated the relationship between financial development and economic growth in South Africa using the annual time series data (1980 to 2022) from the South African Reserve Bank and Quantec Easy Data. Method: The study employed both the cointegrated autoregressive distributed lag (ARDL) and the Granger causality approach for the analyses. Results: The unit test results revealed that the variables were stationary and nonstationary at level, implying a mixture of I(0) and I(1), hence the ARDL approach. The cointegration analysis revealed that the variables are cointegrated, which means there is a long run equilibrium relationship among them. Furthermore, the Granger causality test results revealed that causality runs from GDP to interest rate liberalisation or vice versa. Originality/relevance: This study took a different angle by splitting financial development into four proxies and used interest rate liberalisation as an additional variable in the system.

Suggested Citation

  • Phumla Mahlangu, 2025. "Financial development and growth nexus," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 0, September.
    • Handle: RePEc:jaf:journl:v::y:2025:i::n:758
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    References listed on IDEAS

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    1. Boikos, Spyridon & Panagiotidis, Theodore & Voucharas, Georgios, 2022. "Financial development, reforms and growth," Economic Modelling, Elsevier, vol. 108(C).
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    4. Wasi Ul Hassan Shah & Bo Wang & Rizwana Yasmeen, 2023. "Evaluating the role of banking efficiency, institutions and financial development for sustainable development: Implications for Belt and Road Initiative (BRI)," PLOS ONE, Public Library of Science, vol. 18(10), pages 1-19, October.
    5. Kwamivi Mawuli Gomado, 2025. "Impact of uncertainty on economic growth: The role of pro‐market institutions in developing countries," Kyklos, Wiley Blackwell, vol. 78(1), pages 3-44, February.
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    Keywords

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    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • N8 - Economic History - - Micro-Business History
    • G3 - Financial Economics - - Corporate Finance and Governance

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