Revisiting linkages between financial development, trade openness and economic growth in South Africa: fresh evidence from combined cointegration test

Revisiting linkages between financial development, trade openness and economic growth in South... This study revisits the impact of financial development on economic growth in South Africa by incorporating trade openness in the production function. The paper covers the period of 1970–2011. We apply the Bayer–Hanck combined cointegration approach to examine the long run relationship between the variables. Our results indicate that financial development stimulates economic growth. Capital use adds in economic growth but trade openness impedes economic growth. The demand-side hypothesis is validated in South Africa. This paper suggests that government should redirect trade policies to reap optimal fruits of financial development for long run economic growth. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quality & Quantity Springer Journals

Revisiting linkages between financial development, trade openness and economic growth in South Africa: fresh evidence from combined cointegration test

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Publisher
Springer Netherlands
Copyright
Copyright © 2014 by Springer Science+Business Media Dordrecht
Subject
Social Sciences, general; Methodology of the Social Sciences; Social Sciences, general
ISSN
0033-5177
eISSN
1573-7845
D.O.I.
10.1007/s11135-014-0023-x
Publisher site
See Article on Publisher Site

Abstract

This study revisits the impact of financial development on economic growth in South Africa by incorporating trade openness in the production function. The paper covers the period of 1970–2011. We apply the Bayer–Hanck combined cointegration approach to examine the long run relationship between the variables. Our results indicate that financial development stimulates economic growth. Capital use adds in economic growth but trade openness impedes economic growth. The demand-side hypothesis is validated in South Africa. This paper suggests that government should redirect trade policies to reap optimal fruits of financial development for long run economic growth.

Journal

Quality & QuantitySpringer Journals

Published: Apr 3, 2014

References

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