بررسی مجدد رابطه توسعه مالی و رشد اقتصادی در کنیا

This paper re-examines the causal relationship between financial development and economic growth in Kenya for the period 1966–2005 within a quadvariate vector autoregressive (VAR) framework by including exports and imports as additional variables to the finance–economic growth nexus. We use four conventionally accepted proxies for financial development, namely money supply (M2), liquid liabilities (M3), domestic bank credit to the private sector and total domestic credit provided by the banking sector (all percent of GDP). Applying a modified version of the Granger causality test due to Toda and Yamamoto [Toda, H.Y. and Yamamoto, T., Statistical inference in vector autoregressions with possibly integrated process. Journal of Econometrics 1995; 66; 225–250], our empirical results suggest that in three out of the four measures of financial development we found evidence of a two-way Granger causality: (1) between domestic credit provided by the banking sector and economic growth; (2) between total domestic credit provided by the banking sector and economic growth, and (3) between liquid liabilities and economic growth. This implies that neither the supply-leading nor the demand-following hypotheses are supported in Kenya and that economic growth and financial development are jointly determined, or they complement each other. A major implication of our finding is that financial development promotes economic growth in Kenya and that policies at enhancing the development of the financial sector can help to spur economic growth.

The level of financial development and the degree of international trade openness are among the most important macroeconomic variables the empirical economic growth literature has identified as being highly correlated with growth performance across countries (Beck, 2002 and Sachs and Warner, 1995). Empirical evidence shows that countries with a better-developed financial system tend to grow faster and that finance is not only pro-growth but also pro-poor suggesting that financial development helps the poor catch up with the rest of the economy as it grows (Beck et al., 2007 and Baltagi et al., 2009). Moreover, the endogenous growth theory as articulated by Greenwood and Jovanovic (1990) and Bencivenga and Smith (1991) and others also stresses that financial development is an important factor for fostering long-run economic growth as finance is able to facilitate growth by enabling efficient intertemporal allocation of resources, capital accumulation and technological innovation (see Ang, 2008, Abu-Bader and Abu-Qarn, 2008, Levine, 2005 and Demirgüç-Kunt and Levine, 2008). Further, the theoretical model of Blackburn and Hung (1998) also predicts that both financial development and international trade liberalization enhance economic growth. If financial development causes trade openness and since trade openness promotes economic growth, then financial development is beneficial to economic growth. Conversely, if trade causes financial development and since financial development promotes economic growth, then trade openness is beneficial to growth.

This paper re-examined the financial development–economic growth nexus for Kenya for the period 1966–2005 using the Toda and Yamamoto (1995) version of the Granger causality test. The empirical evidence suggests that in three out of the four proxies for financial development we found a bi-directional causality running between each of the three proxies of financial development and economic growth. Accordingly, there was a feedback: (1) between total domestic credit provided by the banking sector and economic growth; (2) between total domestic credit provided by the banking sector and economic growth, and (3) between liquid liabilities and economic growth. There was also a limited support for a bi-directional causality running between financial development, exports and imports. A major implication of our finding is that financial development promotes economic growth in Kenya and that policies aimed at enhancing the development of the financial sector can help to spur economic growth. As to future research, the finance–growth nexus can be tested using principal component analysis by combining proxies for financial development and other financial policy variables that affect the development of the financial sector.