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The Impact of financial development on investment in Botswana: an ARDL-Bounds testing approach

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  • Muyambiri, Brian
  • Odhiambo, Nicholas M

Abstract

This paper examines the impact of both bank-based and market-based financial development on investment in Botswana during the period 1976 ? 2012, using the autoregressive distributed lag (ARDL) bounds testing approach. The study adopts a flexible accelerator model, which enhances the relationship between financial development and investment. In order to capture the breadth and depth of the financial sector in the study country, the study makes use of bank- and market-based financial development indices. These are constructed from an array of bank- and market-based financial development indicators. The empirical results of this study show that while bank-based financial development has both a long-run and short-run positive impact on investment in Botswana, market-based financial development has no significant impact on investment, either in the short run or in the long run.

Suggested Citation

  • Muyambiri, Brian & Odhiambo, Nicholas M, 2016. "The Impact of financial development on investment in Botswana: an ARDL-Bounds testing approach," Working Papers 20164, University of South Africa, Department of Economics.
    • Handle: RePEc:uza:wpaper:20164
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    Cited by:

    1. Brian Muyambiri & Nicholas M. Odhiambo, 2018. "The Impact Of Financial Development On Investment: A Review Of International Literature," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 9(2).
    2. Lira P. Sekantsi & Sayed Timuno, 2017. "Electricity Consumption In Botswana: The Role Of Financial Development, Industrialisation And Urbanization," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 19, pages 75-102, June.

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    More about this item

    Keywords

    Botswana; Investment; Bank-Based Financial Development; Market-Based Financial Development; Flexible Accelerator Model;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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