Estimate the Impact of Financial Development on Economic Growth-Case Study of 9 Countries.pdf

1、This study investigates the relationship between financial development andeconomic growth.The study utilizes panel data for 9 selected African countries,between 2002 through to 2012.It applies the tool of panel Generaliz

2、ed Method of Moments GMM model,First difference,Panel Fully Modified Least Squares(FMOLS)and fixed effect,Panel Least Squares.Regressions were carried out,for GMM and FMOLS.The study discovers that there is positive and

3、significant relationship between financial development and economic growth,which is in line expectations.For the caseof fixed effect,Panel Least Squares however,the study finds negative insignificantrelationship between

4、financial development and economic growth,which is contrary toour thought.Furthermore,capital formation shows a positive significant influence oneconomic growth for all results.The coefficient of Trade openness is negati

5、ve andstatistically significant;Trade openness however,does not contribute to the growth.This implies that as the study countries become more open to the rest of the world,theirgrowth is scuttled.It smacks of unfavorable

6、 international trade between Africa and therest of the world.The conclusion was therefore,financial development has a positiveinfluence on economic growth for both the short-and long-run.The financial system inthese coun

7、tries needs to be improved through financial deepening and liberalization;this will go a long way in stimulating economic growth and development.Also,institutional and structural issues should be addressed so as to favor

8、 financial development and hence,economic growth,if efficiently and vigorously pursued,will bebeneficial to the study countries.The research findings asserted that international tradeis not favorable to the study countri

9、es.Consequently recommending trade policyreforms.Probably,subject to international treaties and accords to which these studycountries are signatories,a trade policy that focuses on import substitution coupled with streng