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The relationship between financial deepening and economic growth in Tanzania

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  • Oludele A. Akinboade

    (Department of Economics, University of South Africa (UNISA), Pretoria, Republic of South Africa)

Abstract

The study examines the relationship between financial deepening and economic growth in Tanzania. The ratio of bank deposit liability to nominal gross national product is used as a measure of financial deepening and modelled for relationship with real per capita income. The static ordinary least squares (SOLS) and the dynamic ordinary least squares (DOLS) estimation methods are used. The model examines the periods of financial repression and of financial liberalization. The results suggest that though the real interest rate has insignificant impact overall, it is mixed for the two periods under consideration. Whereas, its impact on financial deepening is negative during the period of financial repression, it exerts a small but positive impact on financial development during the period of financial liberalization. The relationship between financial deepening and economic growth appears to be surprisingly negative and significant overall and during the period of financial liberalization but insignificant during financial repression. The results from the tests for causality suggest that financial deepening and economic growth are however independent in Tanzania. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • Oludele A. Akinboade, 2000. "The relationship between financial deepening and economic growth in Tanzania," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 939-950.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:7:p:939-950
    DOI: 10.1002/1099-1328(200010)12:7<939::AID-JID668>3.0.CO;2-I
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    6. IWASAKI, Ichiro & ONO, Shigeki, 2023. "Economic Development and the Finance-Growth Nexus : A Meta-Analytic Approach," CEI Working Paper Series 2023-06, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

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