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Asymmetric Impact of Financial Development on Economic Growth in Mauritius

Author

Listed:
  • Saungweme Talknice

    (Department of Economics, 121359 University of South Africa , P.O Box 392, UNISA 0003, Pretoria, South Africa)

  • Maluleke Glenda

    (Department of Economics, 121359 University of South Africa , P.O Box 392, UNISA 0003, Pretoria, South Africa)

  • Odhiambo Nicholas M.

    (Department of Economics, 121359 University of South Africa , P.O Box 392, UNISA 0003, Pretoria, South Africa)

Abstract

This paper examines the asymmetric impact of financial development on economic growth in Mauritius during the period 1980–2021. The analyses were carried out using a nonlinear autoregressive distributed lag (NARDL) model in conjunction with additional complementary tests, including the NARDL bounds F-test for cointegration, the Brock-Dechert-Scheinkman (BDS) nonlinearity test, and the Wald test for asymmetries. The findings of the bounds F-test provide support for a nonlinear cointegration, whereas the BDS test shows the presence of nonlinearity in the data for all the variables. The Wald test results revealed an asymmetric relationship between financial development and economic growth in Mauritius, both in the short and long run. The NARDL findings show that, on average, positive changes in financial development lead to economic growth in the long and short run. Therefore, the paper encourages the government of Mauritius to continue pursuing policies aimed at the expansion of its financial sector since it has a significant positive impact on its economic growth.

Suggested Citation

  • Saungweme Talknice & Maluleke Glenda & Odhiambo Nicholas M., 2024. "Asymmetric Impact of Financial Development on Economic Growth in Mauritius," Statistics, Politics and Policy, De Gruyter, vol. 15(2), pages 221-243.
    • Handle: RePEc:bpj:statpp:v:15:y:2024:i:2:p:221-243:n:1002
    DOI: 10.1515/spp-2023-0019
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    More about this item

    Keywords

    financial development; economic growth; NARDL bounds testing approach; Mauritius;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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