scholarly journals Effect of capital inflows on financial development in Ghana

2019 ◽  
Vol 7 (1) ◽  
pp. 85-102
Author(s):  
Daniel Agyapong ◽  
Michael Asiamah ◽  
Joop Lloyd Crabbe
Keyword(s):  
Financial Development ◽  
Negative Impact ◽  
External Debt ◽  
Financial Sector ◽  
Capital Inflows ◽  
Annual Data ◽  
Policy Makers ◽  
Long Run ◽  
Significant Negative Impact ◽  
Short Run

The study examines the effect of capital inflows on financial development in Ghana. The study employs the Johansen and Juselius multivariate cointegration approach in analysing the interactions between the variables using annual data spanning 1970 to 2014. The results show foreign direct investment (FDI), external debt, and remittance inflows have significant negative impact on financial development in the long run. Furthermore, there was significant negative relationships between external debt, remittance inflows, and financial development in the short run. However, the relationship between FDI and financial development in the short run was not significant. The study was only limited to Ghana. However, the study will help countries particularly developing countries in analysing inflows of capital and their effect on the development of financial sector for policy purposes. Furthermore, this study provides avenues for policy makers to properly formulate policies containing capital inflows for effective financial sector development. Also, the study will help policy makers in terms of how issues of capital flight must be addressed and how to take pragmatic steps to channel remittances inflows to productive sectors of the economy.

scholarly journals Foreign Direct Investment, External Debt, and Balance of Payment: A Causality Analysis for Bangladesh

2020 ◽  
Author(s):  
Muhammad Mahmud Mostafa
Keyword(s):  
Foreign Direct Investment ◽  
Granger Causality ◽  
Direct Investment ◽  
Negative Impact ◽  
External Debt ◽  
Causality Analysis ◽  
Causality Test ◽  
Long Run ◽  
Significant Negative Impact ◽  
Short Run

The purpose of this study is to analyze the causal relationship of external debt and balance of payment with foreign direct investment (FDI) in Bangladesh for the period of 1980 to 2017 through the application of Johansen Cointegration technique, Vector Error Correction Model (VECM), and Granger Causality approach. Results of cointegration and VECM indicate a significant long-run relationship between dependent (FDI) and independent variables (external debt and balance of payment). External debt is found to have a significant negative impact on FDI in the long-run, but it is found insignificant in the short-run. In contrast, the balance of payment has a significant positive effect on FDI both in the long-run and short-run. Results of the Granger causality test reveal that there exists bidirectional short-run causality between the balance of payment and FDI; that is, both the balance of payment and FDI affect each other. But no unidirectional or bidirectional short-run causality is found between external debt and FDI. Keywords: FDI, external debt, balance of payment, cointegration, VECM, causality

Financial development and poverty reduction in India: an empirical investigation

2016 ◽  
Vol 43 (2) ◽  
pp. 106-122 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri
Keyword(s):  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Annual Data ◽  
Causality Test ◽  
Content Type ◽  
Financial Sector Development ◽  
Long Run ◽  
Integration Test ◽  
Short Run

Purpose – The purpose of this paper is to examine the relationship between financial sector development and poverty reduction in India using annual data from 1970 to 2012. The paper attempts to answer the critical question: does financial sector development lead to poverty reduction? Design/methodology/approach – Stationarity properties of the series are checked by using Ng-Perron unit root test. The paper uses the Auto Regressive Distributed Lag (ARDL) bound testing approach to co-integration to examine the existence of long-run relationship; error-correction mechanism for the short-run dynamics and Granger non-causality test to test the direction of causality. Findings – The co-integration test confirms a long-run relationship between financial development and poverty reduction for India. The ARDL test results suggest that financial development and economic growth reduces poverty in both long run and short run. The causality test confirms that there is a positive and unidirectional causality running from financial development to poverty reduction. Research limitations/implications – This study implies that poverty in India can be reduced by financial inclusion and financial accessibility to the poor. For a fast growing economy with respect to financial sector development this may have far-reaching implication toward inclusive growth. Originality/value – This paper is the first of its kind to empirically examine the causal relationship between financial sector development and poverty reduction in India using modern econometric techniques.

scholarly journals THE CROWDING-OUT EFFECT OF FISCAL POLICY ON CAPITAL INFLOWS IN NIGERIA

2020 ◽  
pp. 043
Author(s):  
Abdurrauf Idowu Babalola ◽  
Saidat Oluwatoyin Onikosi-Alliyu
Keyword(s):  
Fiscal Policy ◽  
Budget Deficit ◽  
Negative Impact ◽  
Capital Inflows ◽  
Crowding Out ◽  
Explanatory Variables ◽  
Long Run ◽  
Significant Negative Impact ◽  
Short Run ◽  
The Government

The study investigated the effect of fiscal policy on crowding out capital inflows in Nigeria using annual data between 1970 and 2011 by using the foreign direct investment (FDI) as proxy to capital inflows represent the dependent variable, budget deficit (BD), foreign borrowing (FL) and domestic borrowing (DL) as proxies to fiscal policy are placed as explanatory variables. Cointegration and ECM technique were employed. Our finding showed that in both the short and long run, BD does not crowd out but rather crowd in FDI. In the short run, DL averagely has significant positive impact on FDI.  However, in the long run, DL has significant negative impact on FDI. More so, in both short run and long run period, FL has significant negative impact on FDI, therefore, FL crowds out FDI. The speed of adjustment back to equilibrium showed that the explanatory variables have capacity to adjust FDI significantly. The study recommends that the government could try to be aware of the implication of its fiscal policy in running a budget deficit and making proper decision in sourcing for funds to finance the deficit. Foreign borrowing is less expensive in financing budget deficit, so if the government must borrow, it should give preference to this source. Generally, the government should reduce deficit because of the implications inherent in it.

scholarly journals Public Debt and Economic Growth in Niger: An Autoregressive Distributed Lag Approach

2020 ◽  
Vol 1 (2) ◽  
pp. 56-65
Author(s):  
Issoufou Oumarou
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Unit Root Test ◽  
Annual Data ◽  
African Countries ◽  
Policy Makers ◽  
Significance Level ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

Purpose: The aim of the paper is to examine the existence or not of a long run or a short run relationship between public debt and economic in Niger and investigate the significance of this relationship. Approach/Methodology/Design: The study first applied time series econometrics tests such as Augmented Dickey-Fuller (ADF) unit root test, Bound cointegration test and Auto Regressive Distributed Lag (ARDL) on annual data obtained from the International monetary fund (IMF) and the West African States Central Bank (BCEAO). The observations cover the period from 1970 to 2019. The study then performed some residual tests including serial correlation, normality and heteroskedasticity for the accuracy of the prediction of the model. Findings: The empirical results showed no long run relationship between public debt and economic growth in Niger. The short run analysis revealed that public debt and budget balance have short run causal effects on economic growth in Niger. The coefficients are significant at 10% significance level. Practical Implications: This article gives valuable information to Niger policy makers regarding the effects of public debt on Niger economic growth. The article highlights the effects that public debt has on economic growth in Niger in the short and long run. Therefore helping policy makers decide whether to increase or reduce the borrowing trend. Originality/value: The results of the paper give valuable information on the relationship that public debt may have with economic growth in Sub Saharan African countries with the similar macroeconomic indicators with Niger.

scholarly journals Asymmetric Relationships Between Information and Communication Technology (ICT), Globalization, and Human Development in India: Evidence From Non-Linear ARDL Analysis

2021 ◽  
Author(s):  
Jayanti Behera ◽  
Dukhabandhu Sahoo
Keyword(s):  
Human Development ◽  
Global Financial Crisis ◽  
Negative Impact ◽  
Positive Impact ◽  
Jel Classification ◽  
Annual Data ◽  
Long Run ◽  
Non Linear ◽  
Short Run ◽  
Asymmetric Relationships

Abstract The objective of the paper is to examine the asymmetric relationships between ICT, globalization, and human development in India by analyzing the annual data from 1991 to 2019 through the non-linear autoregressive distributed lag (NARDL) model. The result shows that positive and negative changes in globalization lead to a decline in human development in the long run, consistent with the literature. Further, a positive change in mobile density increases human development in the long run. A decline in internet density has a positive impact on human development in the long run, and it needs further investigation. In the short run, a positive shock in globalization with one lag has a positive impact on human development. Moreover, a previous year positive and negative shocks in internet density have a positive effect on human development while the previous two years positive and negative shocks in internet density have a negative effect on human development in the short run. It is also found that the global financial crisis 2008 has a negative impact on human development. Thus, it is suggested that India has to promote both globalization and ICT judiciously and consciously in order to improve the human development. JEL Classification: O47, F00, I32, C51

Foreign Direct Investment, Financial Development, and Economic Growth Nexus in Bangladesh

2020 ◽  
pp. 056943452093867
Author(s):  
Md. Noman Siddikee ◽  
Mohammad Mafizur Rahman
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Banking Sector ◽  
Negative Impact ◽  
Capital Formation ◽  
Long Run ◽  
Short Run ◽  
The Impact

This article aims to explore the short- and long-run impact of foreign direct investment (FDI), financial development (FD), capital formation, and the labor forces on the economic growth of Bangladesh. We applied the Granger causality test and Vector Error Correction Model (VECM) for this study. The World Bank data for the period of 1990–2018 are taken into account for the analysis. Our findings suggest, in the long run, capital formation has a positive impact, and in the short run, it has a negative impact on gross domestic product (GDP) implying a lack of higher efficiency is persisting in capital management. Similarly, labor forces have an insignificant impact in the short run and a negative impact in the long run on GDP, which confirms the presence of a huge number of unskilled laborers in the economy with inefficient allocation. The impact of FD is found tiny positive in the short run but large negative in the long run on GDP indicating vulnerability of banking sector. These also confirm fraudulence and inefficient use of the domestic credit supplied to the private sector. The impact of FDI is approximately null both in the short and long run, indicating Bangladesh fails to achieve the long-term benefits of FDI. Finally, this study suggests using FDI more in the capital intensive project of the public–private partnership venture than infrastructural development only and also improving the credit management policy of the banking sector. JEL Classifications: F21, F43, J21

Innovation, Finance, and Economic Growth in OECD Countries: New Insights from a Panel Causality Approach

2021 ◽  
pp. 2150013
Author(s):  
Rudra P. Pradhan ◽  
Tamal Nath ◽  
Rana P. Maradana ◽  
Ajoy K. Sarangi
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Oecd Countries ◽  
Policy Makers ◽  
Panel Causality ◽  
Growth Policy ◽  
Long Run ◽  
Short Run ◽  
Sustainable Economic Growth ◽  
Innovation Support

In this paper, using a panel causality approach, we examine endogenous connections between financial development, innovation, and economic growth in OECD countries for the period 1961–2018. The empirical results of our study show that financial development and innovation support long-run economic growth and that the short-run dynamics facet the multifarious interconnections between financial development, innovation, and economic growth. The strategic insight drawn from this research is that to ensure sustainable economic growth, policy-makers in the OECD countries must pay attention to establishing an integrated structure that looks into co-improvement policies concerning the activities that enhance financial development, innovation, and economic growth.

scholarly journals Dynamics of Financial Development, Economic Growth, and Poverty Alleviation: The Indonesian Experience

2018 ◽  
Vol 13 (1) ◽  
pp. 17-30 ◽  
Author(s):  
Sovia Dewi ◽  
M. Shabri Abd. Majid ◽  
Salina Kassim ◽  
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Poverty Rate ◽  
Development Economic ◽  
Annual Data ◽  
Distributed Lag ◽  
Long Run ◽  
The Government

Abstract Although the poverty rate in Indonesia has been declining in the last several years, the rate of poverty decline is slowing down. In order to achieve its poverty reduction target within the stipulated time period, the government has stepped up efforts to enhance the contribution of the financial sector towards poverty reduction. This study aims to empirically explore the interlinkages between financial sector development and poverty reduction in Indonesia. Focusing on annual data covering the period from 1980 to 2015, the study adopts the Autoregressive Distributed Lag (ARDL) cointegration approach to examine the long-run relationship between the variables. The study found that there is a long-run relationship between financial development, economic growth, and poverty reduction in Indonesia. It also documented a unidirectional causality running from the financial sector to poverty reduction and a bidirectional causality between economic growth and poverty reduction. Therefore, policies to ensure the conducive growth of the financial sector would go a long way in promoting the economy, creating employment opportunities, and consequently accelerating poverty eradication

Financial development and income inequality in India: an application of ARDL approach

2015 ◽  
Vol 42 (1) ◽  
pp. 64-81 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri
Keyword(s):  
Income Inequality ◽  
Financial Development ◽  
Trade Openness ◽  
Development Economic ◽  
Annual Data ◽  
Content Type ◽  
Long Run ◽  
Integration Test ◽  
Short Run ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between financial development and income inequality in India using annual data from 1982-2012. Design/methodology/approach – Stationarity properties of the series are checked by using ADF, DF-GLS, KPSS and Ng- Perron unit root tests. The paper applied the auto regressive distributed lag (ARDL) bound testing approach to co-integration to examine the existence of long run relationship; and error correction mechanism for the short run dynamics. Findings – The co-integration test confirms a long run relationship between financial development and income inequality for India. The ARDL test results suggest that financial development, economic growth, inflation aggravates the income inequality in both long run and short run. However, trade openness reduces the gap between rich and poor in India. Research limitations/implications – The present recommend for appropriate economic and financial reforms focussing on financial inclusion to reduce income inequality in India. Originality/value – Till date, there is hardly any study that makes a clear comparison between market-based indicator and bank based indicator of financial development in India and those examining the relationship between finance and income inequality nexus. Further there is hardly any study to include gini coefficient as a proxy for inequality for India and apply ARDL techniques of co-integration, using the basic principles of GJ hypothesis and provide short run and long run dynamics for India. So the contribution of the paper is to fill these research gaps.

scholarly journals The Impact of Inflation on Financial Sector Development: Evidence from Nigeria

2020 ◽  
Vol 12 (2) ◽  
pp. 56
Author(s):  
Afangideh U. J. ◽  
Garbobiya T. S. ◽  
Umar F. B. ◽  
Usman N.
Keyword(s):  
Financial Development ◽  
Significant Relationship ◽  
Financial Sector ◽  
Threshold Effects ◽  
Quarterly Data ◽  
Financial Sector Development ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

This paper examines the Impact of inflation on financial sector development in Nigeria using quarterly data from 2002-2017. Financial sector development is proxied using money supply as a share of GDP (M2/GDP).The Auto-Regressive Distributive lag (ARDL) model is employed to carry out the estimation given the weakness of the Engle-Granger residual-based cointegration technique to test the long-run and short-run effects of the impacts of inflation on financial sector development. The results of the estimation reveal that there is a positive and statistically significant relationship between inflation and financial sector development in Nigeria. There is need to test for threshold effects of inflation on financial development in Nigeria.

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