Original Research
Financial development and economic growth: literature survey and empirical evidence from sub-Saharan African countries
Submitted: 11 August 2011 | Published: 12 August 2011
About the author(s)
Songul Kakilli Acaravci, Mustafa Kemal University, TurkeyIlhan Ozturk, Cag University, Turkey
Ali Acaravci, Mustafa Kemal University, Turkey
Full Text:
PDF (268KB)Abstract
In this paper we review the literature on the finance-growth nexus and investigate the causality between financial development and economic growth in Sub-Saharan Africa for the period 1975-2005. Using panel co-integration and panel GMM estimation for causality, the results of the panel co-integration analysis provide evidence of no long-run relationship between financial development and economic growth. The empirical findings in the paper show a bi-directional causal relationship between the growth of real GDP per capita and the domestic credit provided by the banking sector for the panels of 24 Sub-Saharan African countries. The findings imply that African countries can accelerate their economic growth by improving their financial systems and vice versa.
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