Press Room Vacancies at Bidpa Disclaimer Contact us
Publication  
Annual reports  
BIDPA Briefing  
BIDPA Profile  
Books  
Journals  
Newsletters  
Policy Briefs  
Working papers  
 
 
Detail

Financial Development and Economic Growth in Botswana
bidpa

The study examines the interrelationships between financial development, economic growth, capital accumulation and productivity growth in Botswana over the period 1980-2014. Using the Autoregressive Distributed Lag (ARDL) bound test technique, we find tha

Research Group
 Macroeconomic Forecasting

Date
  12th June 2018

Author
 kedibonye Sekakela

Keywords
  Financial development, capital accumulation, productivity growth, economic growth

Document
  Download

statement

The study examines the interrelationships between financial development, economic growth, capital accumulation and productivity growth in Botswana over the period 1980-2014. Using the Autoregressive Distributed Lag (ARDL) bound test technique, we find that financial development, measured by private credit, has a negative and significant impact on economic growth both in the long and short run. In contrast, we observe that financial development, measured by liquid liabilities, has a positive and significant impact on economic growth in the short run. Furthermore, the empirical results show that the interrelationship between FD (private credit) and economic growth support the supply leading hypothesis while the interrelationships between FD (liquid liabilities) and economic growth support the demand-following hypothesis. On a positive note, the empirical evidence also suggests that financial development (private credit) leads to higher output level in Botswana through promoting the accumulation of assets. Thus, for financial development to promote economic growth through both the accumulation of capital and productivity growth, it is useful to further develop Botswana’s financial market. Efficient financial institutions may encourage innovation by mobilising resources to finance promising investment projects, evaluating prospective entrepreneurs and allowing investors to diversify the risks related to uncertain innovative activities. It is also crucial to improve the investment environment in Botswana which will encourage lending activities by the financial sector, especially towards the business sector. Furthermore, if diversification of the Botswana economy continues, we can expect the financial development to play a more prominent role in the country’s overall economic performance in the future.


News
main news heading
As part of the strategy development process BIDPA held a one-day strategy validation workshop for Board of Trustees and Board sub-committees’ members on 5th July 2018, in Kasane....Read more
 
Front page news
BIDPA ranks fourth best African Think Tank
The Think Tank has been steadily progressing positively over the past few years. In the 2014 Global Go To Think Tank Index Report, BIDPA ranked fifth, whilst in 2013, 2012 and 2011 the institute was ranked tenth, twelfth and twenty ninth respectively. ..Read more
BoB should tighten screws on banks – BIDPA
The Botswana Institute for Development Policy Analysis (BIDPA) has called on Bank of Botswana (BoB) to tighten the screws on commercial banks. In a recently released special briefing reviewing the bank charges in Botswana, BIDPA said as the regulator, the..Read more
Beef export competitiveness deteriorates – BIDPA study
Despite impressive performance at the beginning, Botswana has experienced declining beef export competitiveness since the mid 1970s, experts have observed. In a recent working paper titled ‘Export Competitiveness of Botswana’s Beef Industry’ published by ..Read more
 
BIDPA House
Plot 134 Tshwene Drive International Finance Park Private Bag BR-29 Gaborone Botswana
Tel: (+267) 3971750 Fax: (+267) 3971748 Email: webmaster@bidpa.bw
Designed and Developed by Weblogic