Article

Financial innovation and economic growth in the SADC

Published in: African Journal of Science, Technology, Innovation and Development
Volume 8 , issue 5-6 , 2016 , pages: 483–495

DOI: 10.1080/20421338.2016.1226705

Author(s): Alex Bara Department of Economics, South Africa , Gift Mugano Department of Economics, South Africa , Pierre Le Roux Department of Economics, South Africa

Keywords: Autoregressive Distributed Lag (ARDL) , economic growth , financial innovation , innovation , SADC , Autoregressive Distributed Lag (ARDL) , economic growth , financial innovation , innovation , SADC

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Abstract

This study empirically establishes the causal relationship between financial innovation and economic growth in the SADC. Using an Autoregressive Distributed Lag (ARDL) Model, estimated by Pooled Mean Group and Dynamic Fixed Effects, the study finds that financial innovation generally has a positive relationship with economic growth in the long run for the SADC. Introducing Mobile Banking props up the role of financial innovation in growth in the SADC. The long-run estimations show mixed effects on proxy variables other than Mobile Banking, strengthening the importance of having appropriate measures for financial innovation. Panel Granger causality tests establish that there is no causality, in any direction, between financial innovation and growth, both in the short and long run.

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