Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Savings-investment-financial development trilogy: evidence from SSA

Savings-investment-financial development trilogy: evidence from SSA <jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The study seeks to examine the role of financial development (FD) in the Feldstein–Horioka (FH) puzzle. The novelty of this study is based on the fact that the measures of FD are expanded to account for the qualitative nature of the financial sector (“better finance”).</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>The study used annual dataset for 37 countries in sub-Saharan Africa (SSA) for the period 1999 through 2010 and relied on the system generalised method of moments (GMM) technique, which takes accounts of endogeneity-related issues.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The estimated FH coefficients ranged between 0.419 and 0.720. The qualitative measures of FD have higher FH coefficient relative to the traditional or quantitative measure of FD (“more finance”). Hence, improvement in both the quantity and quality of the financial sector might be helpful in the mobilization, distribution and utilization of savings for investment purposes within these economies. The high FH coefficients obtained suggest that the FH puzzle does not hold in the SSA region.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Practical implications</jats:title> <jats:p>Policymakers should formulate and design policies that would seek to ensure the development of the financial sector both in terms of quantity and quality. While taking this into consideration, special attention should be devoted to the qualitative measure of finance.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>The study extends the work of Adeniyi and Egwaikhide (2013) by providing different and, possibly better proxies for FD to capture the efficiency and the qualitative nature of the financial system. This crux of the study serves as the value addition to the literature, as no other study the authors are aware of, has considered the importance of “better finance” indicators in the saving – investment nexus investigation.</jats:p> </jats:sec> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economic Policy CrossRef

Savings-investment-financial development trilogy: evidence from SSA

Journal of Financial Economic Policy , Volume 9 (1): 20-33 – Apr 3, 2017

Savings-investment-financial development trilogy: evidence from SSA


Abstract

<jats:sec>
<jats:title content-type="abstract-subheading">Purpose</jats:title>
<jats:p>The study seeks to examine the role of financial development (FD) in the Feldstein–Horioka (FH) puzzle. The novelty of this study is based on the fact that the measures of FD are expanded to account for the qualitative nature of the financial sector (“better finance”).</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title>
<jats:p>The study used annual dataset for 37 countries in sub-Saharan Africa (SSA) for the period 1999 through 2010 and relied on the system generalised method of moments (GMM) technique, which takes accounts of endogeneity-related issues.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Findings</jats:title>
<jats:p>The estimated FH coefficients ranged between 0.419 and 0.720. The qualitative measures of FD have higher FH coefficient relative to the traditional or quantitative measure of FD (“more finance”). Hence, improvement in both the quantity and quality of the financial sector might be helpful in the mobilization, distribution and utilization of savings for investment purposes within these economies. The high FH coefficients obtained suggest that the FH puzzle does not hold in the SSA region.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Practical implications</jats:title>
<jats:p>Policymakers should formulate and design policies that would seek to ensure the development of the financial sector both in terms of quantity and quality. While taking this into consideration, special attention should be devoted to the qualitative measure of finance.</jats:p>
</jats:sec>
<jats:sec>
<jats:title content-type="abstract-subheading">Originality/value</jats:title>
<jats:p>The study extends the work of Adeniyi and Egwaikhide (2013) by providing different and, possibly better proxies for FD to capture the efficiency and the qualitative nature of the financial system. This crux of the study serves as the value addition to the literature, as no other study the authors are aware of, has considered the importance of “better finance” indicators in the saving – investment nexus investigation.</jats:p>
</jats:sec>

Loading next page...
 
/lp/crossref/savings-investment-financial-development-trilogy-evidence-from-ssa-2HxEe2WbrM
Publisher
CrossRef
ISSN
1757-6385
DOI
10.1108/jfep-02-2016-0013
Publisher site
See Article on Publisher Site

Abstract

<jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The study seeks to examine the role of financial development (FD) in the Feldstein–Horioka (FH) puzzle. The novelty of this study is based on the fact that the measures of FD are expanded to account for the qualitative nature of the financial sector (“better finance”).</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>The study used annual dataset for 37 countries in sub-Saharan Africa (SSA) for the period 1999 through 2010 and relied on the system generalised method of moments (GMM) technique, which takes accounts of endogeneity-related issues.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>The estimated FH coefficients ranged between 0.419 and 0.720. The qualitative measures of FD have higher FH coefficient relative to the traditional or quantitative measure of FD (“more finance”). Hence, improvement in both the quantity and quality of the financial sector might be helpful in the mobilization, distribution and utilization of savings for investment purposes within these economies. The high FH coefficients obtained suggest that the FH puzzle does not hold in the SSA region.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Practical implications</jats:title> <jats:p>Policymakers should formulate and design policies that would seek to ensure the development of the financial sector both in terms of quantity and quality. While taking this into consideration, special attention should be devoted to the qualitative measure of finance.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>The study extends the work of Adeniyi and Egwaikhide (2013) by providing different and, possibly better proxies for FD to capture the efficiency and the qualitative nature of the financial system. This crux of the study serves as the value addition to the literature, as no other study the authors are aware of, has considered the importance of “better finance” indicators in the saving – investment nexus investigation.</jats:p> </jats:sec>

Journal

Journal of Financial Economic PolicyCrossRef

Published: Apr 3, 2017

References