Stock Market Development and Economic Growth: Evidence from Cote D'Ivoire

N’Zué, Félix Fofana

doi:10.1111/j.1467-8268.2006.00135.x

Cited by 54 publications

(18 citation statements)

References 35 publications

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“…However, this was attributed to low level of income as evidenced in most developing countries. Similar result was obtained by Nzue (2006) who investigated the relationship between the development of the Ivorian stock market and the country's economic performance. His findings suggest that gross domestic product and stock market development were co-integrated when the control variables were included in the analysis.…”

Section: Literature Surveysupporting

confidence: 83%

“…The high ratio of banking sector credit toGDP suggests that availability of finance is not the problem, rather, the inefficient and low productivity of investment in the private sector. On the contrary, the studies for Ghana, Ivory Coast and India by Osei (2005), Nzue (2006) and Mishra, Das and Pradhan (2009), where investment productivity is high, reveal that credit market development enhanced economic development in the respective economies.…”

Section: Introductionmentioning

confidence: 99%

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Banking Sector Credit Development and Investment Productivity in Nigeria

Ogbuagu¹

2013

IJEBO

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Abstract:In Nigeria, commercial bank credit represent almost 90 percent of the financial system assets and about twothirds of the total credit is allocated to the private sector. Financing of investments through the credit market system portends that investments are associated with a level of productivity. Thus a developed credit market that efficiently utilizes its resources will contribute optimally to economic development. One will expect that increased earnings will lead to increased availability of credits and therefore a better developed credit market but our experience is to the contrary. In contrast, it is difficult to explain the low rate of development registered in most African countries including Nigeria in comparison to the quantum of export earnings they receive. In particular, Nigeria earned enormous revenue from crude petroleum export during oil boom years yet development in Nigeria crawls. This study therefore examined the relationship between credit market development as measured by bank sector credit ratio to GDP and investment productivity, measured as ratio of GDP to Gross Domestic Investment, GDI in Nigeria using data from 1970-2010 and standard econometric method of error correction mechanism. We observed that the improvement in the banking sector reforms ranging from structural adjustment programme (SAP) to the present consolidation era has not been translated to credit market development. This is attributed to inefficient utilization of credit market funds which results in low level of per capita income, low level of investment and ultimately poorly developed banking credit market in Nigeria. Based on the findings of the study, the following policy implications can be drawn: increase in deposit rate will encourage savings, promote credit market development and increase investment. Similarly; a reduction in lending rate will encourage borrowing for capital project financing that will lead to increased investment productivity, increased output, better use of the bank credit market and hence a better developed credit market. Through this, development in the credit market can contribute significantly to economic development via investment productivity. There is the need to increase per capita income through encouraged participation in credit market investment. Thus returns on investment in the credit market should be improved. At present people prefer to spend their money on consumption goods because of the discouraging low deposit rate in the banks. Improved deposit rate will definitely improve investment productivity and economic development through the multiplier process. Foreign direct investment was found to encourage investment productivity; policy should be geared towards attracting more FDI in Nigeria.

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Section: Literature Surveysupporting

confidence: 83%

Section: Introductionmentioning

confidence: 99%

Banking Sector Credit Development and Investment Productivity in Nigeria

Ogbuagu¹

2013

IJEBO

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“…1 The incorporation of a control variable equally helps to make our analysis multivariate as against bivariate. This is important because some studies have shown that two variables might not be cointegrated under bivariate analysis but cointegrated when control variables are included (see the work of Nzue, 2006). 2 We measured pro…tability as return on total assets.…”

Section: Model Specification and Datamentioning

confidence: 99%

Firm Size-Profitability Nexus: Evidence from Panel Datafor Nigeria

Akinlo¹

2012

Economic Research-Ekonomska Istraživanja

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The paper investigates the long run relationship and causality issues between …rm size and pro…tability in 66 …rms in Nigeria by using the panel cointegration method for the period 1999 -2007. The empirical results show that there is long run steady-state relationship between …rm size and pro…tability. The short run causal relationship shows that there is bidirectional relationship between …rms' size and pro…tability. This implies that …rm size Granger causes pro…tability and pro…tability Granger causes …rm size. The results clearly refute the general assumption that causation runs from only …rm size to pro…tability on which most existing studies have been based.

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“…3 Most existing studies have adopted either simple OLS regression (Levine & Zervos, 1993); Instrumental variables procedure (Beck et al, 2000); difference panel estimator (Rousseau & Wachtel, 2000); Generalized method of moment technique (Beck & Levine, 2002). Some have equally used cointegration and error correction approach (Arestis et al, 2001;N'zue, 2006;Rousseau & Sylla, 2005). high economic growth creates demand for certain financial instruments and arrangements and that financial markets effectively respond to these demands and changes.…”

Section: Theoretical Issuesmentioning

confidence: 99%