A Further Investigation of the Growth-Finance Nexus in Kenya
Posted: 30 Apr 2014
Date Written: April 25, 2014
This paper focuses on the finance-development nexus investigating the role of financial deepening and trade openness in general and several macroeconomic variables in the economic development of Kenya. Using a vector error-correction model, the paper tries to determine the causal relationships between finance, exports and economic development using a variety of statistical tests in both static and dynamic models. Our finding emphasize the role of financial development and trade openness in improving capital allocation and growth.
Keywords: Kenya, Finance-growth nexus, Causality, VECM, Variance decomposition, impulse response function
JEL Classification: E44, G10, O16
Suggested Citation: Suggested Citation