Financial and Monetary Reforms and the Finance-Growth Relationship in Zimbabwe
Loading...
Date
2015
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
EconJournals
Abstract
The study employs the Granger causality test in a multivariate cointegration and error correction environment to examine the relationship between
financial development and economic growth in Zimbabwe. Using annual data from 1980 to 2012, and after controlling for financial and monetary
reforms, the study demonstrates a unidirectional causal relationship that runs from financial development to economic growth. The evidence shows
that financial development; banking sector development in particular, is not a passive response to economic growth. Instead, it is a critical tool for
accelerating economic growth. Policy implications of this evidence are that the banking sector in Zimbabwe must be supported with policies that
encourage credit expansion and innovation to support economic growth. The equities market, on the other hand, requires more investor-friendly
innovations and policies, especially with regard to trading efficiency and foreign investor participation in the primary market. In combination, these
policy interventions should be able to magnify the positive effect of financial development on economic growth.
Description
Published Journal Article on Financial and Monetary Reforms and the Finance-Growth Relationship in Zimbabwe.
Keywords
Financial development, Economic growth, Financial reforms, Granger casuality
Citation
Tyavambiza, T. Nyangara, D. Financial and Monetary Reforms and the Finance-Growth Relationship in Zimbabwe. International Journal of Economics and Financial Issues, 2015, 5(2), 590-602