Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC)
The study followed up on the observations made by Bara et al., (2016) who observed that there was a deficit in analyzing the growth-finance nexus using data from SADC countries. The purpose of the study was therefore to ascertain the impact of foreign direct investment on economic growth through the...
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| Format: | Article |
| Language: | English |
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Mashhad: Behzad Hassannezhad Kashani
2021-09-01
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| Series: | International Journal of Management, Accounting and Economics |
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| Online Access: | https://www.ijmae.com/article_141162_83c5d57e413c78c84acd93cc726e7a88.pdf |
| _version_ | 1797744421699059712 |
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| author | Gomolemo Gashiten Paidamoyo Mutepfa |
| author_facet | Gomolemo Gashiten Paidamoyo Mutepfa |
| author_sort | Gomolemo Gashiten |
| collection | DOAJ |
| description | The study followed up on the observations made by Bara et al., (2016) who observed that there was a deficit in analyzing the growth-finance nexus using data from SADC countries. The purpose of the study was therefore to ascertain the impact of foreign direct investment on economic growth through the domestic financial market channel of SADC countries. A sample of countries from the SADC region was employed with the data ranging from 1980 to 2018. The data was obtained from the IMF and the World Bank’s World Development Indicator data base. The regressors used in the study include foreign direct investment, financial sector development, interaction of financial development and foreign direct investment, trade openness, gross capital formation, inflation and government expenditure. Fixed Effects panel regression was used after the Hausman Test revealed that the FEM was the most appropriate model. The outcome of the study revealed that FDI does not have a statistically significant impact on GDP without the interaction with financial sector development. However, the effects were amplified when financial sector development is introduced in the model. With the presence of financial sector development, FDI had a positive and statistically significant impact on GDP and at the same time financial sector development had a positive impact on GDP. Recommendations emanating from the study encourage monetary authorities to strengthen their financial services sector so as to fully benefit from FDI. |
| first_indexed | 2024-03-12T15:09:33Z |
| format | Article |
| id | doaj.art-bde25a46651747118d2735a0d93cdf38 |
| institution | Directory Open Access Journal |
| issn | 2383-2126 |
| language | English |
| last_indexed | 2024-03-12T15:09:33Z |
| publishDate | 2021-09-01 |
| publisher | Mashhad: Behzad Hassannezhad Kashani |
| record_format | Article |
| series | International Journal of Management, Accounting and Economics |
| spelling | doaj.art-bde25a46651747118d2735a0d93cdf382023-08-11T20:36:14ZengMashhad: Behzad Hassannezhad KashaniInternational Journal of Management, Accounting and Economics2383-21262021-09-018964766710.5281/zenodo.5854811141162Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC)Gomolemo Gashiten0Paidamoyo Mutepfa1PhD Scholar at the School of Economics, Zhongman University of Economics and Law, Wuhan, Peoples’ Republic of ChinaMinistry of Local Government and Public Works, Mashonaland East Province, ZimbabweThe study followed up on the observations made by Bara et al., (2016) who observed that there was a deficit in analyzing the growth-finance nexus using data from SADC countries. The purpose of the study was therefore to ascertain the impact of foreign direct investment on economic growth through the domestic financial market channel of SADC countries. A sample of countries from the SADC region was employed with the data ranging from 1980 to 2018. The data was obtained from the IMF and the World Bank’s World Development Indicator data base. The regressors used in the study include foreign direct investment, financial sector development, interaction of financial development and foreign direct investment, trade openness, gross capital formation, inflation and government expenditure. Fixed Effects panel regression was used after the Hausman Test revealed that the FEM was the most appropriate model. The outcome of the study revealed that FDI does not have a statistically significant impact on GDP without the interaction with financial sector development. However, the effects were amplified when financial sector development is introduced in the model. With the presence of financial sector development, FDI had a positive and statistically significant impact on GDP and at the same time financial sector development had a positive impact on GDP. Recommendations emanating from the study encourage monetary authorities to strengthen their financial services sector so as to fully benefit from FDI.https://www.ijmae.com/article_141162_83c5d57e413c78c84acd93cc726e7a88.pdftrade opennesseconomic developmentpanel regressionpairwise granger causality testshausman tests |
| spellingShingle | Gomolemo Gashiten Paidamoyo Mutepfa Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC) International Journal of Management, Accounting and Economics trade openness economic development panel regression pairwise granger causality tests hausman tests |
| title | Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC) |
| title_full | Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC) |
| title_fullStr | Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC) |
| title_full_unstemmed | Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC) |
| title_short | Financial Development, Foreign Direct Investment and Economic Growth: Evidence from Southern Africa Development Community (SADC) |
| title_sort | financial development foreign direct investment and economic growth evidence from southern africa development community sadc |
| topic | trade openness economic development panel regression pairwise granger causality tests hausman tests |
| url | https://www.ijmae.com/article_141162_83c5d57e413c78c84acd93cc726e7a88.pdf |
| work_keys_str_mv | AT gomolemogashiten financialdevelopmentforeigndirectinvestmentandeconomicgrowthevidencefromsouthernafricadevelopmentcommunitysadc AT paidamoyomutepfa financialdevelopmentforeigndirectinvestmentandeconomicgrowthevidencefromsouthernafricadevelopmentcommunitysadc |