| By: |
Munyanyi, Musharavati Ephraim |
| Abstract: |
This study seeks to examine the causal relationship between financial
development and economic growth in Zimbabwe, and it follows the works of
Furqani and Mulyany (2009). Two models of financial development and economic
growth are constructed for the Zimbabwean economy. Time series data is used;
all variables are at their end period rates and are all in yearly frequencies.
The data set stretches from the year 1965 to 2015, giving a total of 51
observations. According to the results, the direction of causality between
these two variables is quite sensitive to the choice of measurement for
financial development in Zimbabwe. In consideration of the result findings,
the study concludes that the relationship between financial development and
economic growth in Zimbabwe confirms the demand-following hypothesis and is
through bank deposits. In essence, financial development in Zimbabwe does not
automatically guarantee a boost in economic growth. Therefore, the study then
suggests that the Zimbabwean government should gear its policies toward
boosting its economic performance so as to strengthen and develop its
financial sector in the process. |
| Keywords: |
Financial Development, Economic Growth, Zimbabwe, ARDL, Supply-leading hypothesis, Demand-following hypothesis, Toda and Yamamoto Granger Causality Analysis |
| JEL: |
O43 |
| Date: |
2017–07–20 |
| URL: |
http://d.repec.org/n?u=RePEc:pra:mprapa:80401&r=fdg |