Understanding the impact of Commercial Banks Lending Rate on Economic Growth: An Empirical Evidence from Ghana.

The main objective of this paper is to investigate the impact of lending rate on economic growth in Ghana. To do this, we employ the autoregressive distributed lags model (ARDL) and the Toda and Yamamoto (1995) causal approach as estimation strategy. The estimates from the ARDL model suggest that ceteris paribus one percent increase in lending rate generates approximately 0.15 decrease in economic growth of Ghana in the long. In the short run, one percent increase in lending rate also generates approximately 0.112 percent decrease in economic growth. Contrary to the widespread belief that lending rate induce economic growth, we find that gross domestic product rather spurs lending rate, using Toda and Yamamoto (1995) causal approach. Our findings suggest that monetary authorities should embark on policy interventions that aim at taming lending rate towards growth enhancing targets. This will encourage individuals, firms and other institutions to borrow from commercial banks to increase investment and consumption to accelerate economic growth. Other policy interventions include strengthening inflation targeting policy to reduce and stabilize inflation while taming exchange rate, monetary policy and treasury bill rate towards economic growth enhancing targets.

Linking energy consumption with economic growth: Rwanda as a case study

This paper analyzes the link between energy consumption and economic growth in Rwanda for the period 1985-2017. The ARDL bounds test was used to test for the existence of co-integration, while the Toda and Yamamoto granger causality test was applied to test for causal direction. The results from the estimation of the ARDL bounds test showed that there was no evidence of co-integration between the considered variables under study. Additionally, the empirical findings confirmed that there was no relationship between economic growth and energy consumption in Rwanda. The findings supported the "neutrality hypothesis" between energy consumption and economic growth. This implies that neither conservative nor expansive policies in relation to energy consumption have any effect on economic growth. Furthermore, the study found a uni-directional granger causality running from energy consumption to economic growth. The results of this findings are consistent with the "growth hypothesis" which postulates that energy consumption leads to economic growth

Shadow economy in Africa: how relevant is financial inclusion?

Purpose This study aims to investigate the possible relationship between financial inclusion and shadow economy in selected African countries. Design/methodology/approach The study uses panel data estimation technique and Toda and Yamamoto causality approach. The data of selected African counties over a period of 2005–2015 are sourced from World Bank Development Indicators, International Monetary Fund International Financial statistics database and International Country Risk Guide. Findings The results show that financial inclusion reduces the size of shadow economy. The causality results show that there is a unidirectional causality moving from financial inclusion to shadow economy. The results demonstrate that a country with lower level of corruption and higher level of growth can benefit more in reducing the size of shadow economy through financial inclusion. Originality/value This study provides the first evidence of the link between financial inclusion and shadow economy from the Sub-Saharan Africa perspective. The study suggests that financial inclusion may be useful in affecting the size of shadow economy in Africa.

Dynamics between Vietnamese real consumption and economic growth

This article uses recent developments in econometric techniques to examine the consumption-led growth hypothesis for Vietnam from 1990–2012. The Granger-causality tests were based on two testing approaches: the vector error correction modeling approach outlined in Toda and Philips, and the augmented level VAR modeling with integrated and cointegrated processes (of arbitrary orders) separately introduced by Toda and Yamamoto (1993) and Dolado and Lütkepohl (1996). Empirical results reveal the mutual exogeneity between the Vietnamese real consumption and GDP growth. This exogeneity poses great challenges for the Vietnamese policymakers who must rebalance their transitional economy. This change, necessitated by recent crises in the international economic landscape, necessitates a shift in the Vietnamese economy from an export-led growth economy to a more inclusive, services-oriented, and consumer-based.

Forward-looking financial risk management and the housing market in the United Kingdom: is there a role for sentiment indicators?

Purpose In the current low-interest market environment, more and more asset managers have started to consider to invest in property markets. To implement adequate and forward-looking risk management procedures, this market should be analyzed in more detail. Therefore, this study aims to examine the housing market data from the UK. More specifically, sentiment data and house prices are examined, using techniques of time-series econometrics suggested by Toda and Yamamoto (1995). The monthly data used in this study is the RICS Housing Market Survey and the Nationwide House Price Index – covering the period from January 2000 to December 2018. Furthermore, the authors also analyze the stability of the implemented Granger causality tests. In sum, the authors found clear empirical evidence for unidirectional Granger causality from sentiment indicator to the house prices index. Consequently, the sentiment indicator can help to forecast property prices in the UK. Design/methodology/approach By investigating sentiment data for house prices using techniques of time-series econometrics (more specifically the procedure suggested by Toda and Yamamoto, 1995), the research question whether sentiment indicators can be helpful to predict property prices in the UK is analyzed empirically. Findings The empirical results show that the RICS Housing Market Survey can help to predict the house prices in the UK. Practical implications Given these findings, the information provided by property market sentiment indicators certainly should be used in a forward-looking early warning system for house prices in the UK. Originality/value To authors’ knowledge, this is the first paper that uses the procedure suggested by Toda and Yamaoto to search for suitable early warning indicators for investors in UK real estate assets.

ICT Investment Impact on Human Capital Development through the Channel of Financial Development in Bangladesh: An Investigation of Quantile ARDL and Toda-Yamamoto Test

The study aims to assess the causal effects of ICT investment, financial development, and human capital development in Bangladesh for the period 1990-2019. To do so, we applied liner ARDL, Quantile ARDL, and directional causality investigated by performing a non-granger causality test. The result of Quantile ARDL confirms long-run effects running from ICT investment and financial development to human capital development. Considering the result short-run estimation, study findings established a positive association between financial development and human capital development but both positive and negative observed in ICT investment on human capital development. Furthermore, the nonlinear relationship established with the standard Wald test. Second, the results of directional causality test following Toda and Yamamoto (1995) proposed framework. Study findings established bidirectional causality running between financial development and human capital development and unidirectional causality running from ICT investment to human capital development. Therefore, it assumed that human capital development in Bangladesh critically relies on financial sector growth and development in the ICT sector. Furthermore, it is also observed that the bidirectional causal relationship also confirmed that is the development of either independent variables can influence each other.

Crime control in Nigeria: how relevant is remittance inflow?

Purpose This paper aims to draw on extant literature to ascertain the relevance of remittance receipts in improving the level of crime control in Nigeria. Design/methodology/approach The study uses time series data spanning for a period of 1986–2017. It adopts dynamic ordinary least square (DOLS), vector auto regression impulse response function, variance decomposition and Toda and Yamamoto causality approach to analyse the data. Findings The following findings are established: DOLS shows that remittance receipt has negative and significant impact on crime rate in Nigeria. The impulse response function indicates that a positive shock to the remittance inflows reduces the level of crime in Nigeria. Moreover, a positive shock to the crime rate decreases the remittance. This implies that both variables respond to each other. Toda and Yamamoto causality approach shows that there is unidirectional causality moving from remittance inflow to criminal activities in Nigeria. These results persist after considering other institutional variables. These findings support the previous evidences on remittances-crime nexus and as well support the opportunity cost theory of crime. Originality/value Apart from being the first study in African region that evaluates the relevance of remittances in crime control, it also analyses the dynamics between crime rate and remittance receipts using time series econometrics which makes the study to be unique. The study shows that remittances can be used as part of toolkits for controlling criminal activities in Nigeria.