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Finance and Growth in Africa: The Broken Link

Author

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  • Panicos O. Demetriades

  • Gregory A. James

Abstract

Utilizing the latest panel cointegration methods we provide new empirical evidence from 18 countries that suggests that the link between finance and growth in Sub-Saharan Africa is ‘broken’. Specifically, our findings suggest that banking system development in this region follows economic growth. They also indicate that there is no link between bank credit and economic growth.

Suggested Citation

  • Panicos O. Demetriades & Gregory A. James, 2011. "Finance and Growth in Africa: The Broken Link," Discussion Papers in Economics 11/17, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:11/17
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    References listed on IDEAS

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    1. Rafael E. De Hoyos & Vasilis Sarafidis, 2006. "Testing for cross-sectional dependence in panel-data models," Stata Journal, StataCorp LLC, vol. 6(4), pages 482-496, December.
    2. Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications - Books, The World Bank Group, number 6626, April.
    3. Svetlana Andrianova & Badi Baltagi & Panicos Demetriades & David Fielding, 2010. "The African Credit Trap," Discussion Papers in Economics 10/18, Division of Economics, School of Business, University of Leicester, revised Oct 2010.
      • Svetlana Andrianova & Badi H. Baltagi & Panicos O. Demetriades & David Fielding, 2010. "The African Credit Trap," Working Papers 1004, University of Otago, Department of Economics, revised May 2010.
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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