Finance–Growth Nexus: Empirical Evidence from South Africa
Finance–Growth Nexus: Empirical Evidence from South Africa

Summary/Abstract: In this paper we investigate the long-run relationship between financial development and economic growth in South Africa for the period 1970-2003. The empirical investigation is carried out in a vector autoregression (VAR) framework based on the theory of cointegration and error-correction representation of cointegrated variables. The results of the cointegration analysis provide evidence of the existence of a long-run relationship between financial development and economic growth. The empirical findings in the paper show a two-way causality between financial development and economic growth.

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