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Title: Causal relationship between financial development and economic growth : theory and evidence
Author: Tirivavi, Austin Muchafa
ISNI:       0000 0001 3533 8026
Awarding Body: University of Southampton
Current Institution: University of Southampton
Date of Award: 2003
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Recent advances in econometric techniques and data availability have intensified empirical research on the relationship between financial development and economic growth. This thesis, which is made up of three main papers, makes further contributions both theoretically and empirically to the subject matter. The thesis begins with general introductory remarks which make up chapter 1. This is followed by the first of the three papers which is theoretical and makes up chapter 2. It constructs a general equilibrium framework in which bank intermediaries evaluate projects ex-ante and fund only those which signal to be of "good" quality. It is shown that, in the absence of transactions costs, such a strategy is dominant. Conditions are derived under which the same strategy dominates in the presence of transactions costs. Chapters 3 and 4 are made up of empirical papers. Chapter 3 is time series based and tests for Granger Causality between bank development and economic growth for individual countries. The tests focus on the micro-channels through which finance and growth affect each other as articulated by theory. Macroeconomic stability is controlled for. Most results are found to be tenuous to macroeconomic stability and show reverse causality. Dynamic correlation between stock market development and economic growth is found to be weak. Chapter 4 performs GMM dynamic estimation on panel data and does group comparison by level of development. The paper rejects pooling data from different levels of development into single regression. Evidence shows differential impacts of financial development on economic growth by level of development. Chapter 5 summarizes, concludes and suggests further areas for research.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Econometrics