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http://hdl.handle.net/123456789/2595
Title: | The Nexus between Economic Growth and Financial Development: The Case of Ethiopian Economy |
Authors: | Mussema, Fozia |
Keywords: | Nexus, Economic Growth, Financial Development, Ethiopian Economy |
Issue Date: | Jul-2014 |
Publisher: | St. Mary's University |
Abstract: | This research tries to examine the effect of financial sector on the economic
growth of Ethiopia over the period of 1980-2013. The paper uses ordinary
least square method to determine both long-run and short-run effects of
financial development on economic growth. It uses commercial-central bank
asset ratio as an indicator of financial development where as variables such
as openness, lagged real GDP, total investment, aid and labor force were
used as conditioning variables. As to the trends of growth and financial
sector of the country, Ethiopia has been experiencing strong economic
growth compared to early years; the major financial institutions operating in
Ethiopia are banks, insurance companies and micro-finance institutions and
the financial sector of the country shows a slightly optimistic sign of growth
but the performance of the financial sector of Ethiopia as compared to other
middle-income African countries shows the need for more improvement. The
empirical investigation shows a negative and significant effect of financial
development indicator (i.e. commercial-central bank asset ratio) on the
economic growth of Ethiopia. In addition, the regression results indicated
that the conditioning variables openness and labor force showed an
expansionary effect on the Ethiopian economy where as aid showed a
significantly negative effect on the economic growth. Generally, the result of
the study indicates that economic growth of Ethiopia is significantly
influenced by financial sector development. |
URI: | http://hdl.handle.net/123456789/2595 |
Appears in Collections: | The 8th Student Research Forum
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