dc.contributor.author | Muli, Anthony M | |
dc.date.accessioned | 2013-05-07T11:16:07Z | |
dc.date.available | 2013-05-07T11:16:07Z | |
dc.date.issued | 2008-07 | |
dc.identifier.uri | http://erepository.uonbi.ac.ke:8080/xmlui/handle/123456789/19782 | |
dc.description.abstract | The relationship between financial development and economic growth is a crucial
issue for both developing and developed countries. The importance of this issue
depends on the financial intermediation functions and their effects on the economic
growth process. In this sense, many economists have made theoretical and empirical
studies on the relationship between financial development and economic growth and
the direction of this study in recent years. Therefore this study seeks to empirically
explore the causal link between the level of financial development and economic
growth in Kenya for the period 1967 to 2006. To achieve the objectives, both
Granger-causality analysis and Error Correction Model (ECM) were applied based on
the theory of cointegration. The results of the cointegration analysis provide evidence of a stable long run
relationship between economic growth and financial development in Kenya. This
implies that whenever there is a shock to the system, short run adjustments occur to
re-establish long run equilibrium. With respect to the direction of long run causality,
the granger-causality analysis indicated that there is a bidirectional relationship
running from financial development to economic growth and vice versa. Thus an
increase in the level of financial development would raise real GDP while improved
economic growth would trigger higher financial development. In policy terms, the findings imply that Kenya can accelerate economic growth by
improving the financial sector since financial development can be an engine of growth
in this country. Financial deepening and further institutional reforms should constitute
a successful strategy towards enhancing Kenya's economic performance. | en |
dc.description.sponsorship | University of Nairobi | en |
dc.language.iso | en | en |
dc.subject | Error Correction Model (ECM) | en |
dc.subject | Financial development | en |
dc.subject | Economic growth | en |
dc.subject | Empirical analysis | en |
dc.subject | Kenya | en |
dc.title | Financial development and economic growth in Kenya | en |
dc.title.alternative | An empirical analysis | en |
dc.type | Thesis | en |
local.publisher | Department of Economics, University of Nairobi | en |