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Article

Financial Development and Economic Growth: Evidence from Low-Income Nations in the SADC Region

Faculty of Commerce, Independent Institute of Education, Johannesburg 1724, South Africa
Int. J. Financial Stud. 2024, 12(3), 62; https://doi.org/10.3390/ijfs12030062
Submission received: 16 October 2023 / Revised: 7 May 2024 / Accepted: 14 May 2024 / Published: 27 June 2024

Abstract

The study sought to examine the relationship between financial development and economic growth in low-income nations in the SADC region. Motivated by the observation that numerous states in the SADC region lack adequately developed financial systems, this investigation was undertaken. Many SADC states are low-income countries, and they remain financially underdeveloped, which could compromise their growth prospects. The analysis was quantitative in nature, and used panel data to achieve its objectives. The data period spanned from 2000 to 2022. The dynamic common correlated effects (DCCE) technique was used for estimation purposes. Results showed that there is a positive relationship between financial development and economic growth. The relationship was also found to be causal: financial development is not only a result of economic growth; it also influences growth. The evidence from the findings supports the notion that financial development is needed to increase the effectiveness of resource allocation and consequently promote growth. This calls on the governments in the countries under investigation to create environments that foster financial development.
Keywords: financial development; economic growth; financial system; finance-induced turmoil; capital accumulation; low-income countries financial development; economic growth; financial system; finance-induced turmoil; capital accumulation; low-income countries

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MDPI and ACS Style

Mlambo, C. Financial Development and Economic Growth: Evidence from Low-Income Nations in the SADC Region. Int. J. Financial Stud. 2024, 12, 62. https://doi.org/10.3390/ijfs12030062

AMA Style

Mlambo C. Financial Development and Economic Growth: Evidence from Low-Income Nations in the SADC Region. International Journal of Financial Studies. 2024; 12(3):62. https://doi.org/10.3390/ijfs12030062

Chicago/Turabian Style

Mlambo, Courage. 2024. "Financial Development and Economic Growth: Evidence from Low-Income Nations in the SADC Region" International Journal of Financial Studies 12, no. 3: 62. https://doi.org/10.3390/ijfs12030062

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