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Financial Innovation and Economic Growth in the SADC

Alex Bara, Gift Mugano and Pierre Le Roux
Publication date
August 2016

The study empirically establishes the causal relationship between financial innovation and economic growth in SADC. Using an Autoregressive Distributed Lag (ARDL) Model, estimated by Pooled Mean Group and Dynamic Fixed Effects, the study finds that financial innovation has a positive relationship to economic growth in long run for SADC. The long run estimations, however, show existence of a weak relationship. Introducing a direct measure of financial innovation buttresses the role of financial innovation in growth in SADC. 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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Series title
Working paper 627
African Journal of Science, Technology, Innovation and Development
JEL classifications