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Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia
The main objective of this study is to examine the relationship between banking development and economic growth in Namibia. Namibia has eight licenced commercial banks, four of which have been operational prior to the country's independence; Bank Windhoek Limited, First National Bank Namibia Limited...
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| Format: | Thesis |
| Language: | English |
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Graduate School of Business (GSB)
2021
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| _version_ | 1867613892249649152 |
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| access_status_str | Open Access |
| author | Diergaardt, Colin |
| author2 | Alhassan, Abdul Latif |
| author_browse | Alhassan, Abdul Latif Diergaardt, Colin |
| author_facet | Alhassan, Abdul Latif Diergaardt, Colin |
| author_sort | Diergaardt, Colin |
| collection | Thesis |
| description | The main objective of this study is to examine the relationship between banking development and economic growth in Namibia. Namibia has eight licenced commercial banks, four of which have been operational prior to the country's independence; Bank Windhoek Limited, First National Bank Namibia Limited, Nedbank Namibia Limited and Standard Bank Namibia Limited (BON, 2018). The other four licenced commercial banks began operating post independence. The banking development indicators employed by this study were broad money to nominal GDP (M2), private sector credit to nominal GDP (PSC), and lending interest rates (INTR). The data used in this study is annual data, covering the period 1991 to 2018, engaging the VAR/VECM framework in order to determine the presence of a long-run and short-run association. In addition, this study engaged the Granger causality methodology in order to determine the casual association between banking development and economic growth. The error correction term equation suggested a long-run relationship between the variables in the VECM, while the results indicated that there are no short run associations amongst the variables. Further, the results of the Granger causality test indicated a bidirectional causality between LNRGDP and LNPSC. In addition, the causality test showed that lags of LNINTR Granger causes LNPSC, which is consistent with the neoclassical theory of interest rate, which pronounces that interest rates are determined by the demand and the supply of loanable funds. Moreover, lags of LNINTR and lags of LNM2 granger causes LNRGDP, which suggest that banking development causes economic growth. The study recommended that the Namibian banks should reform credit policies and decrease the cost of debt in an attempt to avail more credit to the private sector in order to sustain and stimulate economic growth. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/33712 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:43:22.002Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2021 |
| publishDateRange | 2021 |
| publishDateSort | 2021 |
| publisher | Graduate School of Business (GSB) |
| publisherStr | Graduate School of Business (GSB) |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/33712 Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia Diergaardt, Colin Alhassan, Abdul Latif Mutize, Misheck Banking development economic growth granger causality credit policies Namibia The main objective of this study is to examine the relationship between banking development and economic growth in Namibia. Namibia has eight licenced commercial banks, four of which have been operational prior to the country's independence; Bank Windhoek Limited, First National Bank Namibia Limited, Nedbank Namibia Limited and Standard Bank Namibia Limited (BON, 2018). The other four licenced commercial banks began operating post independence. The banking development indicators employed by this study were broad money to nominal GDP (M2), private sector credit to nominal GDP (PSC), and lending interest rates (INTR). The data used in this study is annual data, covering the period 1991 to 2018, engaging the VAR/VECM framework in order to determine the presence of a long-run and short-run association. In addition, this study engaged the Granger causality methodology in order to determine the casual association between banking development and economic growth. The error correction term equation suggested a long-run relationship between the variables in the VECM, while the results indicated that there are no short run associations amongst the variables. Further, the results of the Granger causality test indicated a bidirectional causality between LNRGDP and LNPSC. In addition, the causality test showed that lags of LNINTR Granger causes LNPSC, which is consistent with the neoclassical theory of interest rate, which pronounces that interest rates are determined by the demand and the supply of loanable funds. Moreover, lags of LNINTR and lags of LNM2 granger causes LNRGDP, which suggest that banking development causes economic growth. The study recommended that the Namibian banks should reform credit policies and decrease the cost of debt in an attempt to avail more credit to the private sector in order to sustain and stimulate economic growth. 2021-08-06T08:45:24Z 2021-08-06T08:45:24Z 2020 2021-08-06T07:40:39Z Master Thesis Masters MBA http://hdl.handle.net/11427/33712 eng application/pdf Graduate School of Business (GSB) Faculty of Commerce |
| spellingShingle | Banking development economic growth granger causality credit policies Namibia Diergaardt, Colin Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia |
| thesis_degree_str | Master's |
| title | Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia |
| title_full | Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia |
| title_fullStr | Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia |
| title_full_unstemmed | Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia |
| title_short | Analysing the Relationship between Banking Development and Economic Growth: Time Series Evidence from Namibia |
| title_sort | analysing the relationship between banking development and economic growth time series evidence from namibia |
| topic | Banking development economic growth granger causality credit policies Namibia |
| url | http://hdl.handle.net/11427/33712 |
| work_keys_str_mv | AT diergaardtcolin analysingtherelationshipbetweenbankingdevelopmentandeconomicgrowthtimeseriesevidencefromnamibia |