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Financial development and Economic growth in the Democratic Republic of the Congo : Supply leading or Demand following?

PINSHI, Christian P. and KABEYA, Anselme M. (2020): Financial development and Economic growth in the Democratic Republic of the Congo : Supply leading or Demand following?

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Abstract

The purpose of this paper is to verify the direction of the relationship between financial development and economic growth in the Democratic Republic of the Congo (DRC). Using Granger's causality framework, the results indicate that there is a robust, one-way relationship ranging from economic growth to financial development. This result validates Demand following hypothesis in the DRC. Consequently, policies aimed at supporting economic growth, such as the accumulation of endogenous factors (knowledge, education, research), macroeconomic stabilization, reconstruction of infrastructure, structural reforms, creation of a good economic environment for the private and regulatory sectors, and good governance are very important for improving financial development in the DRC.

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