Assessing Foreign Direct Investment long-run contribution to financial development: evidence from Namibia

Muruko-Jaezuruka, V. ORCID: https://orcid.org/0000-0001-5782-1369 and Gupta, P. (2020) Assessing Foreign Direct Investment long-run contribution to financial development: evidence from Namibia. Economics Bulletin, 40 (4). pp. 3111-3123. ISSN 1545-2921

Abstract/Summary

Abstract We investigate the impact of Foreign Direct Investment on financial development using Domestic Credit to the Private Sector and Private Credit by Deposit money banks as a broader measure of financial indicators. We use the autoregressive distributed lag bounds co-integration analysis for long-run estimation on the Namibia economy as a case study for the periods 1990 to 2017. The Error Correction Model and the Granger causality approach are further used to examine the short-run dynamics and the direction of causality. Our results confirm the presence of a long-run association between FDI and financial development along with economic growth and human capital, the existence of uni-directional causal association from FDI to financial development measured in terms of domestic credit to the private sector, and bi-directional causation when measured in terms of private credit by deposit money banks. We conclude that FDI benefits Namibia financial system whilst playing a critical role in promoting human capital and economic development.

Item Type	Article
URI	https://reading-clone.eprints-hosting.org/id/eprint/118688
Refereed	Yes
Divisions	No Reading authors. Back catalogue items Arts, Humanities and Social Science > International Study and Language Institute (ISLI)
Publisher	Economics Bulletin
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