Article citationsMore >>

A. W. Gregory and B. E. Hansen, “Tests for Cointegration in Models with Regime and Trend Shifts,” Oxford Bulletin of Economics and Statistics, vol. 58, no. 3, pp. 555-560, 1996.

has been cited by the following article:

Article

The Effect of Bank Credit on the Economic Growth of Tanzania

1Department of Finance, University of Dar- es- Salaam Business School, Dar-es-Salaam, Tanzania


Journal of Finance and Economics. 2020, Vol. 8 No. 5, 211-221
DOI: 10.12691/jfe-8-5-2
Copyright © 2020 Science and Education Publishing

Cite this paper:
Elizabeth Joseph. The Effect of Bank Credit on the Economic Growth of Tanzania. Journal of Finance and Economics. 2020; 8(5):211-221. doi: 10.12691/jfe-8-5-2.

Correspondence to: Elizabeth  Joseph, Department of Finance, University of Dar- es- Salaam Business School, Dar-es-Salaam, Tanzania. Email: elizashabo@yahoo.com

Abstract

The purpose of this study is to examine the causal relationship between bank credit and economic growth. Specifically, the study examined the causal relationship between bank credit by borrowing sector and economic growth and between overall financial intermediation and economic growth. Time series data for the period 1993-2017 is used. Causality test and vector error correction is applied. Results show that there is no causal relationship between bank credit and economic growth and between economic growth and bank credit. In the long run, bank credit has a significant positive effect on economic growth. Policies towards enhancing growth of financial sector should be emphasized to enable increase in credit provision and promote economic growth through investment in different sectors of the economy. The positive long run effect of financial intermediation means that enhancing deposit mobilization still remain paramount towards credit provision by banking financial institutions.

Keywords