Simplice A, Asongu (2012): Linkages between investment flows and financial development: causality evidence from selected African countries.
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This paper introduces previously missing financial components(efficiency, activity and size) in the assessment of the finance-investment nexus. Using VAR models in the perspectives of VECM and short-run Granger causality, three broad findings are established: (1) while finance led investment elasticities are positive, investment elasticities of finance are negative; (2)but for Guinea Bissau, Mozambique and Togo, finance does not seem to engender portfolio investment; (3)contrary to mainstream literature, financial efficiency appears to impact investment more than financial depth. Four policy implications result: (1)extreme caution is needed in the use of single equation analysis for economic forecasts; (2)financial development leads more to investment flows than the other way round; (3) financial allocation efficiency is more relevant as means to attracting investment flows than financial depth; (4) the somewhat heterogeneous character of the findings also point to shortcomings in blanket policies that are not contingent on country-specific trends in the finance-investment nexus.
|Item Type:||MPRA Paper|
|Original Title:||Linkages between investment flows and financial development: causality evidence from selected African countries|
|Keywords:||Financial development; Investment; Causality; Africa|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C50 - General
C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C40 - General
F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements
|Depositing User:||Simplice Anutechia Asongu|
|Date Deposited:||10. May 2012 12:50|
|Last Modified:||13. Mar 2015 11:02|
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