Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia

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dc.contributor.advisorAlhassan, Abdul Latif
dc.contributor.advisorMutize, Misheck
dc.contributor.authorDiergaardt, Colin
dc.date.accessioned2021-08-06T08:45:24Z
dc.date.available2021-08-06T08:45:24Z
dc.date.issued2020
dc.date.updated2021-08-06T07:40:39Z
dc.description.abstractThe main objective of this study is to examine the relationship between banking development and economic growth in Namibia. Namibia has eight licenced commercial banks, four of which have been operational prior to the country's independence; Bank Windhoek Limited, First National Bank Namibia Limited, Nedbank Namibia Limited and Standard Bank Namibia Limited (BON, 2018). The other four licenced commercial banks began operating post independence. The banking development indicators employed by this study were broad money to nominal GDP (M2), private sector credit to nominal GDP (PSC), and lending interest rates (INTR). The data used in this study is annual data, covering the period 1991 to 2018, engaging the VAR/VECM framework in order to determine the presence of a long-run and short-run association. In addition, this study engaged the Granger causality methodology in order to determine the casual association between banking development and economic growth. The error correction term equation suggested a long-run relationship between the variables in the VECM, while the results indicated that there are no short run associations amongst the variables. Further, the results of the Granger causality test indicated a bidirectional causality between LNRGDP and LNPSC. In addition, the causality test showed that lags of LNINTR Granger causes LNPSC, which is consistent with the neoclassical theory of interest rate, which pronounces that interest rates are determined by the demand and the supply of loanable funds. Moreover, lags of LNINTR and lags of LNM2 granger causes LNRGDP, which suggest that banking development causes economic growth. The study recommended that the Namibian banks should reform credit policies and decrease the cost of debt in an attempt to avail more credit to the private sector in order to sustain and stimulate economic growth.
dc.identifier.apacitationDiergaardt, C. (2020). <i>Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia</i>. (). ,Faculty of Commerce ,Graduate School of Business (GSB). Retrieved from http://hdl.handle.net/11427/33712en_ZA
dc.identifier.chicagocitationDiergaardt, Colin. <i>"Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia."</i> ., ,Faculty of Commerce ,Graduate School of Business (GSB), 2020. http://hdl.handle.net/11427/33712en_ZA
dc.identifier.citationDiergaardt, C. 2020. Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia. . ,Faculty of Commerce ,Graduate School of Business (GSB). http://hdl.handle.net/11427/33712en_ZA
dc.identifier.ris TY - Master Thesis AU - Diergaardt, Colin AB - The main objective of this study is to examine the relationship between banking development and economic growth in Namibia. Namibia has eight licenced commercial banks, four of which have been operational prior to the country's independence; Bank Windhoek Limited, First National Bank Namibia Limited, Nedbank Namibia Limited and Standard Bank Namibia Limited (BON, 2018). The other four licenced commercial banks began operating post independence. The banking development indicators employed by this study were broad money to nominal GDP (M2), private sector credit to nominal GDP (PSC), and lending interest rates (INTR). The data used in this study is annual data, covering the period 1991 to 2018, engaging the VAR/VECM framework in order to determine the presence of a long-run and short-run association. In addition, this study engaged the Granger causality methodology in order to determine the casual association between banking development and economic growth. The error correction term equation suggested a long-run relationship between the variables in the VECM, while the results indicated that there are no short run associations amongst the variables. Further, the results of the Granger causality test indicated a bidirectional causality between LNRGDP and LNPSC. In addition, the causality test showed that lags of LNINTR Granger causes LNPSC, which is consistent with the neoclassical theory of interest rate, which pronounces that interest rates are determined by the demand and the supply of loanable funds. Moreover, lags of LNINTR and lags of LNM2 granger causes LNRGDP, which suggest that banking development causes economic growth. The study recommended that the Namibian banks should reform credit policies and decrease the cost of debt in an attempt to avail more credit to the private sector in order to sustain and stimulate economic growth. DA - 2020_ DB - OpenUCT DP - University of Cape Town KW - Banking development KW - economic growth KW - granger causality KW - credit policies KW - Namibia LK - https://open.uct.ac.za PY - 2020 T1 - Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia TI - Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia UR - http://hdl.handle.net/11427/33712 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/33712
dc.identifier.vancouvercitationDiergaardt C. Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia. []. ,Faculty of Commerce ,Graduate School of Business (GSB), 2020 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/33712en_ZA
dc.language.rfc3066eng
dc.publisher.departmentGraduate School of Business (GSB)
dc.publisher.facultyFaculty of Commerce
dc.subjectBanking development
dc.subjecteconomic growth
dc.subjectgranger causality
dc.subjectcredit policies
dc.subjectNamibia
dc.titleAnalysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia
dc.typeMaster Thesis
dc.type.qualificationlevelMasters
dc.type.qualificationlevelMBA
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