Top PDF Financial liberalization, financial development and economic growth: the case for South Africa

Financial liberalization, financial development and economic growth: the case for South Africa

Financial liberalization, financial development and economic growth: the case for South Africa

positive and significantly correlated with each growth indicator at the 99 percent confidence level. Bakaert et al (2001), conducted a cross sectional study of about 95 countries. They also constructed a financial liberalization indicator based on official liberalization dates in different countries. The official liberalization indicator took a value of one when the equity market is liberalized and zero otherwise. Through an empirical analysis Bakaert et al (2001) observed that financial liberalization positively influences real GDP growth by 1.13% over a 5 year period. Despite the enormous support of the link by several authors, several researchers have articulated a number of doubts about the limitations of cross section approach and its results. The suspicions on the results emanate from possible heterogeneity of results and lack of robustness. Such misgivings manifested through a study by Arestis and Demetriades (1996) who counter the causal analysis of the correlation between economic growth and financial development by King and Levine (1993). Arestis and Demetriades (1996) argue that this analysis is based on a weak statistical basis. By utilizing exactly the same data set, Arestis and Demetriades (1996) provide evidence that the contemporaneous correlation between the major financial indicator and economic growth is stronger than the correlation between lagged financial development and growth. Moreover, Ayadi (2006) joins the bandwagon against the positive relationship between financial liberalization and economic growth. Ayadi (2006) asserts that Nigeria`s efforts to liberalize the financial markets failed dismally from the period reviewed, 1987 to 2001. Cointegration and error correction models were used on quarterly wholesale and retail interest rates from 1987 through 2001 to evaluate their long short-run dynamics. The reform policies failed to yield any positive result on the financial sector as the oligopolistic structure persisted, failure to ensure market driven interest rates, interest rates spreads remained high. As such this did not improve the prospects of using interest rates as a means for the Central Bank of Nigeria to manage the banking system.
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Reexamining the Relationship between Financial Development and Economic Growth: the case of South Africa.

Reexamining the Relationship between Financial Development and Economic Growth: the case of South Africa.

Alfaro, Chanda, Kalemli, and Sayek (2004) assumed that a better financial system would reduce the cost of external finance to firms, thereby promoting economic activities. Therefore, they investigated the relationship between foreign direct investments (FDI), financial markets and the economic growth. They examined whether the impact of foreign direct investment depends on the quality and quantity of financial services. To represent the financial system, many proxies were used in this research: liquid liabilities of financial system, the ratio of commercial bank assets to the summation of commercial bank and central bank assets, the ratio of credit by financial intermediaries to private sector to the GDP, the ratio of credit by deposit money to private sector to the GDP, and the stock market liquidity. After giving consideration to the openness of a country in the model, they concluded that developed financial markets boost the impact of FDI on the economic growth.
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The Effects of Trade Liberalization, Financial Development and Economic Crisis on Economic Growth in Indonesia

The Effects of Trade Liberalization, Financial Development and Economic Crisis on Economic Growth in Indonesia

For the case in Indonesia, trade and financial liberalization policies had begun in the 1980s, when the domestic economy was experiencing the shock of oil prices plummeted (Hill, 2000). Such conditions forced the government to reform trade policies by lowering tariffs and convert several import licenses. Meanwhile, the financial development in Indonesia here can be separated by deregulation package in June (PAKJUN) in October 1983 and the deregulation package (PAKTO) 1988. The essence of the policy is to remove barriers for investors to set up a new bank, to provide flexibility for banks to open branch offices, lowering the required reserve ratio, and encourage the development of the money market and capital market. Through these two policies, it can mobilize public funds which can then be pushed back economic growth (Nasution, 1990).
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Asymmetric co-integration and causality effects between financial development and economic growth in South Africa

Asymmetric co-integration and causality effects between financial development and economic growth in South Africa

And even beyond the notion of asymmetric cointegration, a more pressing issue in the literature concerns the causal relationship established between the two variables, of which not properly accounted for, could lead to misleading policy implications. As highlighted by Akinlo and Egbtunde (2010), four possible causal relationships can be identified between financial development and economic growth, namely; finance-led growth; growth driven finance; two way causal relationship and no causality effects. Under the finance-led-growth hypothesis, causality is assumed to run from financial development to economic growth and in this instance, improvements in financial development result in improved economic growth levels and yet direct improvements in productivity levels do not affect financial development. This “supply-leading view” postulates that productivity levels can be increased by either an improvement in the efficiency of capital accumulation or an increase in the rate of savings or investment (Eita and Jordaan, 2010). In the second type of causal relation (i.e. growth driven finance) direct improvements in economic growth which result in higher development of financial system whilst direct improvements in financial development do not affect economic growth. This “demand-leading view” postulates that economic growth creates various types of financial services to which the financial system responds (Chakraborty, 2010). In the third case of causality, commonly referred to as feedback causality, improvements in either financial development or economic growth will exert a positive influence on the counter variable. Under such a circumstance, economic development can be best achieved when macroeconomic policies are designated towards simultaneously influencing both financial depth and real sector development. And finally, there can also exist a case in which there can be no causality found to exist between financial development and economic growth, and implications under such a scenario are that policymakers can only affect financial development and economic through separate policies.
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Asymmetric co integration and causality effects between financial development and economic growth in South Africa

Asymmetric co integration and causality effects between financial development and economic growth in South Africa

Up until recent, researchers have been adamant in empirically modelling developments in the financial sector strictly through banking activity since several monetary economists view capital markets in developing economies as „burgeoning casinos‟ which exert very little effect on economic growth. However the efficiency of capital markets in contributing towards economic development cannot be taken for granted, especially if stock market development is complimentary to banking activity in promoting long-run economic growth, as Odhiambo (2013) has, for example, established for the case of South African financial intermediaries. Although theory does not provide us with clear-cut guidelines for identifying a specific indicator of stock market development, it does, however, suggest that stock market development, as a multi-dimensional concept, is indeed influenced by stock market size, liquidity and risk diversification (Demirgic-Kunt and Levine, 1996). For instance, Levine (1991) builds a theoretical model which shows that by reducing liquidity costs, and increasing the average productivity of capital and the rate of savings, the liquidity and size of stock markets can foster higher economic growth through capital accumulation. Similarly, Holmstrom and Tirole (1993) demonstrate on how liquid stock markets can increase incentives to acquire information about firms and improve corporate governance, which in turn promotes efficient resource allocation and productivity. Moreover, Greenwood and Smith (1997) use an endogenous growth model to demonstrate how large, liquid and efficient stock markets can ease resource mobilization, by agglomerating savings as a means of enlarging the set of feasible investment projects, which boosts productivity efficiency and hence improves long-run economic growth.
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How Does Financial Liberalization affect Economic Growth?

How Does Financial Liberalization affect Economic Growth?

period averages. A coefficient estimate λ < ˆ 0 indicates that there is conditional conver- gence in productivity. The speed of convergence b can be obtained from the definition of λ = − 100 1 − τ e bτ . I first estimate equation (5) on a 25-year cross section (τ = 25). As enpha- sized by the empirical growth literature (see Temple, 1999 for a survey), cross-sectional estimates have several limits. They do not allow me to exploit the time-series variation in the data, which is important to assess the effects of reforms, such as financial iberalization; nor to control for omitted variables, country-specific effects and endogeneity of the regres- sors. In this case, addressing endogeneity with an instrumental variable strategy looks rather difficult. Legal origins may be a good instrument for financial development (see La Porta et al, 1997), but do not look particularly suitable to instrument a variable as F LIB, which involves policy changes and perhaps reversals over the sample. Bekaert et al. (2003) address the issue by separately estimating a probit for F LIB, and find that the quality of institutions is crucial in determining the choice of liberalization. But as the institutional framework is known to be an important determinant of TFP (see, among others, Hall and Jones, 1999), it does not seem a valid instrument for F LIB, in a regression for TFP.
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An Empirical Investigation of the Effects of

Financial Liberalization on the Economic Growth of Libya: A Case Study

An Empirical Investigation of the Effects of Financial Liberalization on the Economic Growth of Libya: A Case Study

The literature review in the first part of this section focuses mainly on research conducted on the relationship between financial liberalization and economic growth. The second part of the review includes a brief overview on studies which which demonstrate a link between financial liberalization, FDI and economic growth. Numerous studies have attempted to explain the relationship between financial development and economic growth (Levine (1997), King and Levine (1993), Eid (2007) and Omar, Callie and Chia (2008)). The latter has indeed become an object of extensive analysis and debate, the question being whether or not financial liberalization under the GATS is critical in influencing economic growth. Economists have found empirical evidence that the liberalization of the financial sector together with other reforms can boost income and growth. For instance, (Levine, 1997) indicated that both developed and developing countries with open financial sectors have typically achieved a faster rate of economic growth than those with closed financial sectors. Also, (King & Levine, 1993) found that growth is positively related to the level of financial development. Looking at evidence from 80 countries from 1960 to 1989, the authors show that the relative size of the financial sector had a positive correlation to economic growth over this period (however, positive correlation may simply reflect the fact that faster growing countries have larger financial sectors because of the increase in the number of financial transactions conducted).
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Financial Development, Financial Instability and Economic Growth: The Case of Maghreb Countries

Financial Development, Financial Instability and Economic Growth: The Case of Maghreb Countries

The similar results showing a positive relationship between the financial development and the economic growth were obtained by other authors, namely Savvides (1995), Oldedokun (1996) and Ozturk (2008). These results are consistent with the predictions of the theorists of the financial liberalization, as opposed to the financial repression. This contribution is made through the impact of the financial system on trade and the initially exchanges at first; and then on the volume and quality of the investment. The financial intermediation by the banks affects positively the savings and investment in several ways. Firstly, the financial intermediaries thanks to the economies of scale reduce the information costs of the external financing, and thereby increase the implied investment returns while reducing the cost of borrowings. Moreover, they adapt the financial assets to the preferences, which are often divergent, of the savers and investors by reducing the information asymmetry between lenders and borrowers. This is due to the fact that they have control over the activity and management of the company directors, or because of inventing new financial assets, which reduce the risks related to the activities of loans and borrowings, insolvency risks, liquidity and unexpected changes in asset prices. Indeed, the financial intermediaries make an optimal equation of supply and demand of the financing by increasing the volume of savings invested. At the same time, they improve the selection of investments and thus the marginal productivity of the capital.
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Financial development and economic growth in the era of financial liberalization

Financial development and economic growth in the era of financial liberalization

2. Trend Analysis of Financial Intermediation and Economic growth in Nigeria Lending Interest rate in Nigeria as a major determinant of financial intermediation has been on a steady increase since the post-SAP periods before the policy on financial liberalization. This makes investors policy decisions uncertain and deterrent to forecasting. A lot of factors could be responsible for interest rate volatility such as poor management practices of commercial banks, selective intermediation practice, inflation, distress borrowing by firms, unstainable government deficits and exchange rate volatility. During this period the interest rate was market driven, banks were running at a loss and due to the increased rate of competition, banks were tempted to invest in risker projects in order to recover losses quickly. This was also the case in the post liberalization era in southern cone countries as many banks increased deposit interest rate to very high levels and sometimes interest was paid by attracting new deposit, making commercial banks operation a Ponzi scheme. (Tybout1985).
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Financial sector development and economic growth nexus in South Africa

Financial sector development and economic growth nexus in South Africa

The results also imply that a stable macroeconomic environment is critical for the growth of the economy. For the greater part of the period considered South Africa was enjoying a relatively stable macroeconomic environment with inflation, real interest rates and exchange rates not fluctuating by big margins. All these three macroeconomic variables were significant in explaining economic growth and they also had the correct signs. What this implies is that if there is macroeconomic instability which leads to large changes (variability) in these macroeconomic variables economic growth is impacted on in a big way. So rapidly depreciating exchange rate, high inflation and high variability in real interest rates need to be avoided at all costs as these could hurt the economy. However, South Africa appears to have done very well as far as stabilising its macroeconomic environment is concerned as it has one of the most stable currencies in Africa and relatively low inflation levels.
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An investigation of the relationship between financial sector development and economic growth in South Africa

An investigation of the relationship between financial sector development and economic growth in South Africa

Caporale et al (2004) examined the casual linkage between stock market development and economic growth using a sample of seven countries. The study specifically looked at the relationship between stock market development, financial development and economic growth. The study used the VAR’s technique in order to determine the causality with a heavy emphasis of the possibility of omitted variable bias. The results of the study indicate that a well-developed stock market can foster economic growth in the long run. According to Caporale et al (2004) the stock market does this through faster capital accumulation and better resource allocation. Their argument is that the stock market plays a vital role in improving the country’s economy in the long run. They importantly also mention that by not adding the stock market variable to the model and the analysis it will produce misleading results. This study is important to look at as it shows the importance of the stock market variable as a proxy for financial development in the model and more importantly the reason for having this variable as opposed to other studies that could not implement this variable in their studies. Burzynska (2009) looked at the Chinese banking sector and its effect on the financial development and economic growth of the country. The study did this by trying to determine the impact of different banking institutions on economic growth while at the same time looking at the compatibility of the Chinese financial policies and economic performances. The study used annual data from 1978 to 2005 and used the granger causality test procedure under vector autoregressive model. The results of the study indicate that the direction of causality is affected by the type of bank as well as the type of loan. The study does however conclude that there is a bi directional relationship between economic growth, policy banks and loans to the commercial sector. The study concluded by indicating that it is important to further develop financial services and ensure policies are put in place to provide better credit allocation and improve access to financing. This shows the importance of the banking sector to the economy and how the different types of loans affect financial development and economic growth in the country.
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The effects of financial development, economic growth, coal consumption and trade openness on environment performance in South Africa

The effects of financial development, economic growth, coal consumption and trade openness on environment performance in South Africa

The EKC literature mostly uses energy consumption and trade openness as control variable to omit any specification bias. However, studies using financial development as an important determinant of environmental performance are very rare [see, for instance, Grossman and Krueger [25]; Tamazian et al. [26]; Halicioglu [27], Tamazian and Rao [28] and Jalil and Feridun, [29]]. The most obvious reason to use financial development is that the presence of a well-developed financial sector attracts foreign direct investment (FDI), which in turns may stimulate economic growth and, hence, affect the environmental quality (Frankel and Romer, [30]). In addition, financial development results in mobilization of financial resources for environment-related projects at reduced financing costs (Tamazian et al. [26]). Regarding the concern that environmental projects are public sector activity, Tamazian and Rao [28] document that a well-functioning financial sector will especially be helpful for all tiers of government to get finances for such projects. Moreover, financial development may also lead to technological innovations (King and Levine, [31]; Tadesse, [32]) and these technological changes can then contribute significantly to reduction in emissions particularly through energy sector (Kumbaroglu et al. [33]). Likewise, Claessens and Feijen [34] consider a developed financial sector is essential for carbon trading as environmental regulators may initiate programs that are directly connected with financial markets and frequently make available the information regarding the environmental performances of firms (Dasgupta et al., [35]; Lanoie et al., [36]). Lastly, the announcements of rewards and acknowledgment of superior environmental performance have a positive effect on capital market that is a vital fraction of the financial system [see, for example, Lanoie et al., [36]; Dasgupta et al., [35]; [37]; and Tamazian et al. [26] among others]. Thus, Tamazian et al. [26] rightly points out that CO 2 emission can be lessened
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Financial liberalization and the development of stock markets in Sub Saharan Africa

Financial liberalization and the development of stock markets in Sub Saharan Africa

credit controls, liberalizing interest rate, denationalizing banks, and strengthening pru- dential regulations, investors are encouraged by the availability of cheaper credit into investing more on the stock markets. This seems to be the case in to happen in the long run in all four markets as their response to a shock to financial liberalization becomes and stays persistently positive in the long run. However, similarly to the case of a shock to capital account liberalization, there is a varying trend in the initial response of the mar- kets. In both South Africa and Kenya, the initial response of stock market development to a shock to financial sector liberalization is negative. This is a puzzling result especially in the case of South Africa whose financial sector is considered as more developed and sophisticated by international standards, compared to the other three markets. However, coupled with the high level of integration between the market and more developed ones, a shock to financial sector liberalization, such as relaxation of credit controls and interest rate deregulation that increase the real rate of interest, may have an adverse initial impact on stock market development due to an increase in the pre-disposition to save and a loss of risk adverse investors’ confidence in the domestic banking sector and financial stability of the country. In the WAEMU, the delayed response of stock market development to a shock to financial liberalization may be attributed to its relatively small size and relative isolation from other more developed markets. It may take global investors, who have the higher rate of participation in this market, a little delay to redirect their funds to the market.
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The Impact of Financial Sector Liberalization on Financial Development and Economic Growth: Evidence from Kenya

The Impact of Financial Sector Liberalization on Financial Development and Economic Growth: Evidence from Kenya

The World Bank (1994) assessment of financial reforms in Africa was conducted to a large extent within the McKinnon-Shaw framework, with the overall approach to financial development — removing financial repression, dismantling directed credit programs, introducing better accounting, legal, and supervisory frameworks, continuing with institution building, deepening and developing capital and money markets — is postulated to be on target and in the right direction. As shown in Section II, the reforms carried out by the four countries under study have varied, but all have entailed interest rate liberalization as well as bank restructuring and liquidation. The Report does not address itself adequately to the basic tenets of this paradigm, with the presumption that if the problems described above were resolved, then reforms would achieve the objectives postulated by Mckinnon-Shaw.
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Financial development and economic growth: evidence from West Africa

Financial development and economic growth: evidence from West Africa

King and Levine (1993a; b) report that …nance has positive e¤ects on eco- nomic growth in developing countries. Studying the causal relationship between …nance and growth in 13 sub-African countries, Ghirmay (2004) shows that the two sectors have a long-run relationship and suggests that they can accelerate their economic growth by improving the …nancial sector. Abu-Bader and Abu- Qarn (2008) argue that …nancial development Granger-caused economic growth in Egypt during the period 1960-2001. Allen and Ndikumana (2000) …nd the same result in the case of South African development community. Atindéhou et al. (2005) report a statistically weak causal relationship, between …nance and growth in both causal directions, from …nance to economic growth and from economic growth to …nance, in the Economic Community of West African States (ECOWAS). The previous causality studies have failed to settle the issue
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Studies on financial development and economic growth in sub-Saharan Africa

Studies on financial development and economic growth in sub-Saharan Africa

information in the credit markets. The idea is that information asymmetry is reflected in the evolution of agency costs. In their model, asymmetric information only matters whenever the level of internal funds and collateralizable assets is sufficiently low. In equilibrium lenders find it optimal to restrict the amount of credit only to those firms that can self-finance a low proportion of desired investment. They posit two co-existing firms: affluent firms with abundant cash flow and poor firms with little cash flow and the latter suffer from credit rationing. Thus, given decreasing returns to scale in production, credit-constrained firms exhibit higher diminishing marginal productivity. Their theoretical model finds that information asymmetry affects the relative output movements if it impacts on the allocation of funds between the credit-constrained and unconstrained firms culminating in a composition effect. 18 This composition effect exacerbates the impact of a positive shock whenever the level of internal funds available to credit-constrained firms increases relative to the total amount of funds. Thus, whether asymmetric information amplifies or dampens output fluctuations depends on whether there is a redistribution of funds in favour or against credit-constrained firms. Fazzari et al., (1988) show that fixed investment is dependent on firms‟ liquidity, which would not be the case under perfect capital markets. Acemoglu and Zilibotti (1997) also underscore an important link between financial development and volatility by highlighting the role of diversification risk reduction. They show that when there are indivisible investment projects, in the early stages of development, diversification is impossible. As wealth accumulates overtime, however, diversification becomes possible spurring investment thereby reducing investment risk and volatility. There is also groundswell micro-level evidence on the behaviour of firms that are more likely to be subject to information asymmetries (see for instance Gertler and Gilchrist, 1994).
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Financial Liberalization and Economic Growth – The Nigerian Experience

Financial Liberalization and Economic Growth – The Nigerian Experience

The financial liberalization literature assumed that the removal of government control and restrictions on the workings of the financial market would stimulate higher savings as interest rate would be more market driven. The higher savings would enhance greater investment in the classical Keynesian fashion of savings being equal to investment. The increase in investment would lead to economic development and growth all other things being equal. Therefore, according to the main tenets of the financial liberalization literature, we should expect to see higher saving rates (as well as higher levels of investment and economic growth) following financial liberalization. Is this the case in Nigeria? To establish this, the study employs an empirical examination using the Johansen Co-integration test and the Error Correction Mechanism (ECM). Annual time series data were obtained from the Central Bank of Nigeria Statistical Bulletin for the period 1987 to 2012 on the variables used for the study. The results obtained from the econometric modeling shows the existence of a long-run equilibrium relationship among the variables and co-integration equation at 5% significance level. The Error Correction Mechanism shows a very high coefficient of multiple determinations in both the Over-parameterized and the Parsimonious Models. However, the descriptive statistics shows that financial liberalization has impacted minimally on economic growth in Nigeria for the period under review. The particular sequencing of the liberalization process and the hostile macroeconomic environment in Nigeria over the years has combined to minimize the expected benefits of financial liberalization. The authors recommend that government should promote monetary stability, ensure sound macroeconomic environment and provide critical infrastructures to enable the economy grow in a sustainable manner.
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Financial liberalisation and economic growth in South Africa

Financial liberalisation and economic growth in South Africa

In their study on the effects of financial development on economic growth, Arestis and Demetriades (1997) advocated for the use of time series analysis rather than the cross sectional analysis that “was popularised by Barro (1991).” They presented evidence from both time series and cross sectional approaches and argued that the time series approach is more fruitful in analysing financial development and real output. Arestis and Demetriades found that financial repression had a positive effect on financial development and that the real rate of interest had a negative effect on output. This finding contradicts the liberalisation thesis which predicts a positive association between output growth and real interest rates. In conclusion, they stated that the effects of financial liberalisation depend on the institutional context and existence or lack thereof good governance in the country in question. In the event that there is market failure, there is a scope for government intervention to amend the situation. Thus, in a situation of market failure, financial liberalisation may prove detrimental. Khan and Hassan (1998) undertook to provide empirical evidence concerning McKinnon’s hypothesis for Pakistan. Using annual time-series data for the period 1959–60 to 1994–95, they found strong support for McKinnon’s hypothesis. The coefficients of the saving ratio in the money demand function and of real money balances in the savings function were both found to be positive and statistically significant. These results held true when money demand and savings functions were estimated in static long-run formulations as well as in the dynamic formulation. The authors indicated that the financial liberalisation policies pursued in Pakistan at that time were likely to result in financial deepening. In their conclusions, the authors noted that an increase in the real interest rate (either by increasing the nominal interest rate or by reducing the inflation rate) would lead to the accumulation of money balances (financial assets), which would improve the availability of loanable funds for investment.
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The Contribution of Financial Sector Development for  Economic Growth in East Africa

The Contribution of Financial Sector Development for Economic Growth in East Africa

Under instrumental variables, we have to run FSD on lnGCF, lnDA and OXR using OLS and obtain the estimated value of FSD-OSL. Then we estimate the real GDP using dynamic panel FMOLS by taking lnGDP as a dependent and the estimated FSD-OSL, lnGCF and lnDA as explanatory variables. Lastly, we regress lnGDP on lnGCF and OER as lnGCF is an IV-one for lnGDP or lnGDP on lnDA and OER as lnDA is another IV for lnGDP. However, these lead us to a non- unique solution, which depends on whether lnGCF or lnDA is considered as an IV for lnGDP. To estimate the FSD equation by FMOLS method, we consider the larger value of coefficient of determination between these two regressions. The two stages least squares 2SLS is also applied for solving the problem of endogeneity arises from simultaneous equations model as eq(4a) is exact-identification and eq(4b) is over-identification. We first estimate the reduced form equations by OLS; that is, regress FS on lnGCF, lnDA and OER by OLS and obtain the estimated FSD-OSL, then we estimate lnGDP as a function of estimated FSD, lnGCF and lnDA by FMOLS in eq.(4a). Likewise, for eq.(4b), we regress lnGDP on lnGCF, lnDA and OXR using OLS and obtain the estimated lnGDP, then replace lnGDP by the estimated lnGDP and estimate FSD as a function of the estimated lnGDP and OER by FMOLS. The main difference between IVs and 2SLS is that in the former case the estimated value of the variables are used as instruments, while in the latter case they are used as regressors, in the case where there is exactly-identification, the results of IVs and 2SLS are the same. Note that ̂ -OLS, ̂ -2SLS, ̂ -2SLS, ̂ -2SLS denote the estimated Financial Sector Development FSD and real lnGDP by -OLS and -2SLS methods, respectively.
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Does financial structure matter for economic growth: An evidence from South Africa

Does financial structure matter for economic growth: An evidence from South Africa

The dataset used in the study initially covers 57 (1961-2016) observations. However, for some variables the data span is short. Data on human capital, foreign direct investment, structure activity and structure size are missing during the period 1961-1975. Hence our data sources consist of time series data for South Africa for the period 1975-2016. Data on Gross Domestic Product, total stock market traded, market capitalization, private credit by deposit bank, Human capital, Foreign direct investment, population and trade openness (imports plus exports) are obtained from the world bank development indicators. Data on inflation on the other hand is obtained from the IMF.
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