- Title
- The analysis of the impact of financial integration on financial development and economic growth in the Southern African development community
- Creator
- Ndlovu, Nomusa https://orcid.org/0000-0001-7777-2939
- Subject
- Economic development -- Finance -- Africa, Southern
- Subject
- Financial services industry -- Africa, Southern
- Date
- 2023-11
- Type
- Doctoral theses
- Type
- text
- Identifier
- http://hdl.handle.net/10353/28650
- Identifier
- vital:74491
- Description
- The study investigated the impact of financial integration on financial development and economic growth in the Southern African Development Community using annual data for the period 2000 to 2018. Literature shows that there is no universally accepted measure of financial integration hence the study utilized the Lane and Milesi-Ferretti measure, foreign direct investment as a percentage of GDP and Chinn-Ito (KAOPEN) index in achieving the objectives of the study. One of the main objectives of the study was to examine the impact of financial integration on financial development in the SADC community. The study utilized first difference GMM to achieve this objective and the results showed that Lane and Milesi-Ferretti measure and foreign direct investment as a percentage of GDP significantly affect financial development whilst Chinn-Ito (KAOPEN) index displayed an insignificant effect. The next step was to investigate the impact of financial integration on economic growth in the SADC region. To accomplish this objective, the study investigated both the direct channel as well as the possibility of financial integration indirectly influencing economic growth through financial development, trade openness, and institutional quality. The Three Stage Least Squares (3SLS) technique was utilized on a system of five simultaneous equations in examining the effect of financial integration on economic growth. The results revealed that financial integration affects economic growth both directly and indirectly. Regarding the indirect channels, only the financial development and institutional quality channel proved to be significant. To ensure the robustness of the results the study checked if the impact of financial integration was sensitive to the measure of financial integration and financial development used. The study employed KAOPEN to proxy financial integration while broad money supply (% of GDP) measured financial development. Robustness results confirmed that financial integration affects economic growth both directly and indirectly. This time, the trade openness channel was significant at 10% which shows the benefits through this channel are significant. This shows that the results of the trade openness channel are inconclusive. When the Lane and Milesi-Ferretti measure of financial integration was employed the impact of the trade openness channel was insignificant whilst a significant impact was found based on KAOPEN. The inconclusive findings for the trade openness channel may indicate the impact of financial integration on economic growth depends on the proxy of financial integration utilized. In addition, the study also gathered some interesting results where financial development, institutional quality, trade openness, and government size (government spending) are significant drivers of financial integration. The study makes some fundamental contributions to literature on financial integration, financial development, and economic growth. Initially, the study provides empirical evidence on the nature of the impact of financial integration on financial development in the SADC. In particular, this study contributes to the body of knowledge by showing that the impact of financial integration on financial development is linear. Secondly, this study makes an original contribution to the literature on the channels through which financial integration affect economic growth in the SADC, providing a more subtlety understanding of the mechanisms at play. Finally, the study provides important policy implications for policymakers and financial regulators in the SADC who seek to promote economic growth through financial integration. The findings of the study imply that deeper financial integration is crucial in the SADC region as it can potentially increase the rate of economic growth in the region. Not only economic growth will be boosted but also the institutional quality and the development of the financial sector of the countries in the region. Based on these findings, the study recommends that the governments of the member countries in the region continue to come up with policies that boost regional and international financial integration. The study suggests that to ensure that they continuously reap positive benefits from financial integration, member countries of the SADC should appoint a board that deals with implementation and accountability. This board must be responsible for ensuring that member countries implement the formulated policies and should also hold member countries accountable in case of failure to implement the formulated policies. Since the region is pursuing financial integration, the region must come up with policies that prioritize domestic developments in the form of financial development, improving domestic institutional quality and reducing trade restrictions in advance in order to ensure that preconditions for financial integration are met. Developing these will attract different forms of financial flows or increase financial openness which will ultimately boost economic growth.
- Description
- Thesis (PhD) -- Faculty of Management and Commerce, 2023
- Format
- computer
- Format
- online resource
- Format
- application/pdf
- Format
- 1 online resource (xii, 174 pages)
- Format
- Publisher
- University of Fort Hare
- Publisher
- Faculty of Management and Commerce
- Language
- English
- Rights
- rights holder
- Rights
- All Rights Reserved
- Rights
- Open Access
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Collections
UFH Department of Economics
| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | NDLOVU_201105431_ECONOMICS.pdf | 57 MB | Adobe Acrobat PDF | View Details Download |