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The relationship between financial deepening and economic growth in Tanzania

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  • Oludele A. Akinboade

    (Department of Economics, University of South Africa (UNISA), Pretoria, Republic of South Africa)

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    Abstract

    The study examines the relationship between financial deepening and economic growth in Tanzania. The ratio of bank deposit liability to nominal gross national product is used as a measure of financial deepening and modelled for relationship with real per capita income. The static ordinary least squares (SOLS) and the dynamic ordinary least squares (DOLS) estimation methods are used. The model examines the periods of financial repression and of financial liberalization. The results suggest that though the real interest rate has insignificant impact overall, it is mixed for the two periods under consideration. Whereas, its impact on financial deepening is negative during the period of financial repression, it exerts a small but positive impact on financial development during the period of financial liberalization. The relationship between financial deepening and economic growth appears to be surprisingly negative and significant overall and during the period of financial liberalization but insignificant during financial repression. The results from the tests for causality suggest that financial deepening and economic growth are however independent in Tanzania. Copyright © 2000 John Wiley & Sons, Ltd.

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    Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

    Volume (Year): 12 (2000)
    Issue (Month): 7 ()
    Pages: 939-950

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    Handle: RePEc:wly:jintdv:v:12:y:2000:i:7:p:939-950
    Contact details of provider: Web page: http://www3.interscience.wiley.com/journal/5102/home

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    Cited by:

    1. John Serieux, 2008. "Financial Liberalization and Domestic Resource Mobilization in Africa: an Assessment," Working Papers 45, International Policy Centre for Inclusive Growth.
    2. Baliamoune-Lutz, Mina N., 2006. "Financial Reform and the Mobilization of Domestic Savings: The Experience of Morocco," Working Paper Series RP2006/100, World Institute for Development Economic Research (UNU-WIDER).

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