Does Government Size Moderate Finance- Growth Nexus in Sub-Saharan Africa?

Abstract

We ask how government size impacts the relationship between financial development and economic growth for Sub-Saharan African countries during 1980-2014 period. The empirical strategy relies on panel data techniques of panel smooth transition regression (PSTR) and dynamic GMM approaches to test for non-linearities in finance-growth nexus and endogenously model the non-linearity to depend on government size. Preliminary results from the dynamic panel model show that finance-growth nexus is non-linear. Upon delving further into the non-linearities, our results show that financial development impacts economic growth positively only beyond a necessary threshold level of government expenditure share of 12 percent of GDP. Given the large informal sector and the pervasive market failures in Sub-Saharan African economies, governments need a minimum threshold level of expenditure to “correct” the credit markets and “formalize” the large informal financial sector. Therefore, Sub-Saharan African countries should not shy away from government expenditures that are meant to “correct” market failures in the financial sector or “formalize” the large informal financial sector to make finance work for economic growth.

Keywords

• Financial Development
• Growth
• non-linearity
• Government Size
• PSTR
• System GMM
• Sub-Saharan Africa

Sahra-Altı Afrikada Kamu Sektörünün Büyüklüğü Finans-Büyüme İlişkinde Etkili Mi?

Abstract

Bu çalışmada, Sahra-altı Afrika ülkelerinde kamu sektörünün büyüklüğünün finansal gelişmişlik ve ekonomik büyüme ilişkisini nasıl etkilediği analiz edilmektedir. Finansal gelişmişlik-ekonomik büyüme ilişkisinin doğrusallığı ve kamu sektörü büyüklüğünün bu ilişkideki rolü PSTR yöntemi ve dinamik panel GMM yöntemleri kullanılarak 1980-2014 dönemini için incelenmiştir. Sonuçlar finansal gelişmişlik-ekonomik büyüme ilişkisinin doğrusal olmadığını ve kamu sektörünün büyüklüğünün GSYH’ye oranının yüzde 12 eşik değerinden yüksek olduğu durumlarda finansal gelişmişliğin ekonomik büyüme üzerinde pozitif bir etkiye sahip olduğunu göstermektedir. Sahra-altı Afrika ülkelerinde yüksek kayıtdışılık ve yaygın piyasa aksaklıkları bulunmaktadır. Kredi piyasasındaki aksaklıkların giderilmesi ve kayıtdışılık oranın yüksek olduğu finansal sektörün kayıt altına alınabilmesi için asgari bir düzeyde kamu harcamasına ihtiyaç vardır. Dolayısıyla, finansal sektörün ekonomik büyümeyi destekler bir mahiyete kavuşabilmesi için Sahra-altı Afrika ülkelerinde kamu, piyasa aksaklıklarını düzeltici ve kayıtdışılığı azaltıcı harcama yapmaktan çekinmemelidir.

Keywords

• Finansal Gelişmişlik
• Doğrusal Olmayan
• Kamu Sektörünün Büyüklüğü
• PSTR
• Sistem GMM
• Sahra-altı Afrika

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