عوامل تعیین کننده مالی سرمایه گذاری داخلی در کشورهای جنوب صحرای آفریقا: مدارک از داده های تلفیقی

This study investigates the effects of financial development on domestic investment in a sample of 30 sub-Saharan African countries. It is based on a dynamic serial-correlation investment model including various indicators of financial development, controlling for country-specific fixed effects and nonfinancial factors of investment. The results indicate a positive relationship between domestic investment (total investment and private investment) and various indicators of financial development. Higher financial development leads to higher future levels of investment, implying a potent long-run effect of financial development on domestic investment. The findings imply that financial development can stimulate economic growth through capital accumulation.

Since the beginning of the 1980s, investment rates have fallen in the majority of sub-Saharan African countries.1 In more than half of the 30 countries included in this study, investment rates in the 1980s and 1990s are lower than the rates achieved in the 1970s. This decline in investment is a matter of concern given the close connection between the level of investment and the rate of economic growth as documented in recent studies Ben-David, 1998, Chari et al., 1997, Barro, 1991, Khan and Reinhart, 1990 and Kormendi and Meguire, 1985. It is therefore worthwhile investigating the factors that determine the level of domestic investment in these countries. This paper investigates the role of financial factors in determining domestic investment in sub-Saharan Africa, controlling for nonfinancial factors of investment. The study covers the majority of the economies in the largest area of the developing world where issues of stagnation of domestic investment and underdeveloped financial systems are at the forefront of the current debate in economic development. The premise of this study is that financial development facilitates the channeling of resources from savers to the highest-return investment activities, increases the quantity of funds available for investment, and thus mitigates the liquidity constraints faced by entrepreneurs. Thus a large and liquid financial system reduces the overall costs and risks of investment, which stimulates capital accumulation. The analysis is based on a reduced-form investment model that relates a country’s domestic investment to the level of financial development while controlling for other nonfinancial factors. Following a standard practice in panel data analysis, the investment equation is specified as a dynamic serial correlation model (see Hsiao, 1986, Anderson and Hsiao, 1982 and Anderson and Hsiao, 1981). To test the effects of financial development on investment four indicators are used alternatively: credit to the private sector, total liquid liabilities of financial intermediaries, credit provided by banks, and a composite index combining these three indicators. In addition, an indirect test is performed by investigating whether the response of investment to GDP growth (accelerator effect) is larger among countries with relatively more developed financial systems. The study is based on a panel data set including 30 sub-Saharan countries over 1970–95. An important advantage of using panel data is that they capture both time-series and cross-section variations in investment and its determinants. In a study covering 71 less-developed countries, Odedokun (1996) found that panel data estimation yields more robust (positive) effects of financial development on economic growth than time-series estimation by individual country. This study capitalizes on this important advantage of panel data analysis. The results indicate a positive relationship between domestic investment and all four indicators of financial development. The results are qualitatively similar for total domestic investment and private investment, with stronger effects of financial factors on private investment than on total domestic investment. The findings also suggest that high financial development is a predictor of future levels of domestic investment. Higher financial development in the 1970s is associated with higher investment levels in the 1980s and 1990s. The results also confirm stylized facts on other determinants of investment. Domestic investment is positively affected by real per capita GDP growth (accelerator effect) and trade flows (whether measured by exports, imports, or the sum of the two). External debt, public sector borrowing from the domestic financial system, the black market premium, and inflation negatively affect domestic investment. There is insufficient evidence of a negative effect of government consumption on investment as conventional theory would suggest. The hypothesized negative effect of the interest rate on investment is not robust. The rest of the paper is organized as follows. Section 2 reviews the relevant literature on the links between investment and financial development. Section 3 presents the data and stylized findings. The investment model, the estimation method, and the regression results are discussed in section 4. Section 5 concludes the paper.

The evidence in this paper supports the view that financial factors are important determinants of domestic investment in sub-Saharan Africa. The positive relationship between financial development and investment is documented using four indicators, credit to the private sector, total liquid liabilities of the financial system, credit provided by banks, and an index combining these three indicators. The relationship is stronger for private investment, which is consistent with the expectation that it is private investment that is most dependent on financial development. The results show that high financial development leads to high future investment levels. The study provides evidence on the negative effects of external debt, inflation, black market premia, and government domestic borrowing on investment. Per capita GDP growth and international trade flows have positive effects on domestic investment. The findings of this study contribute to the growing literature that emphasizes the links between the financial sector and real economic activity in the growth process. The study indicates that financial development may affect long-run economic growth by facilitating the allocation of resources into investment activities. The evidence implies that sub-Saharan African countries can benefit from encouraging a balanced expansion of their financial systems. Countries can gain from promoting policies that reduce the costs of financial intermediation (tax policies, regulation policies, etc.), encouraging lending to investment activities, and cutting down on government domestic borrowing for consumption purposes. A number of issues that are relevant to the links between financial development and domestic investment are not explored in this study. For example, it may be worthwhile to investigate whether crosscountry differences in the structure of financial systems have an effect on the ability of financial development to stimulate domestic investment. Moreover, the scarcity of country-level data for sub-Saharan Africa precludes detailed analysis that distinguishes between public and private investment. Furthermore, some important aspects of the links between finance and investment are inevitably blurred in any analysis that uses aggregate data. Such analysis cannot capture the effects of sectoral distribution of credit supply (for example, between small and large firms, services and manufacturing sectors, etc.), or the role of various forms of financing that are not recorded in the official data (like informal credit mechanisms). These caveats, in effect, imply that the results of this study may underestimate the true effects of financial development on investment.