Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307857 
Year of Publication: 
2023
Citation: 
[Journal:] Economic Review: Journal of Economics and Business [ISSN:] 2303-680X [Volume:] 21 [Issue:] 1 [Year:] 2023 [Pages:] 25-40
Publisher: 
University of Tuzla, Faculty of Economics, Tuzla
Abstract: 
This paper examines the dynamic causal relationship between financial development, external debt and investment in Lesotho, Namibia and Eswatini from 1980-2020 using a multivariate Granger-causality model. The study considers trade, savings and economic growth as intermittent variables in the analysis. Adopting the autoregressive distributed lag (ARDL) bounds testing approach, the study results show that the causal relationship between financial development, external debt and investment in Lesotho, Namibia and Eswatini from 1980-2020 is country-dependent. For Eswatini, both investment and financial development Granger cause external debt, both in the short run and in the long run. However, for Lesotho and Namibia, it is the contrary, with external debt Granger causing financial development both in the short run and in the long run. The exception is Lesotho, where external debt is also found to Granger cause investment, also both in the short run and the long run. The study, therefore, concludes that for Eswatini, immense efforts in promoting investment and financial development chiefly stimulate external debt and the real sector in both the short run and the long run. For Namibia and Lesotho, external debt drives financial development. In addition, for Lesotho, external debt also drives investment.
Subjects: 
Financial development
external debt investment
Lesotho
Eswatini
Namibia
JEL: 
G10
G20
O16
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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