An Investigation of the Relationship between Financial Sector Development and Economic Growth
DOI:
https://doi.org/10.47941/ijf.3760Keywords:
Domestic Credit, Interest Rates, Broad Money, Financial Sector Development, ARDL, Zambia.Abstract
Purpose: This study investigated the relationship between financial sector development and economic growth in Zambia for the period 1978-2020.
Methodology: The study used domestic credit to the private sector, broad money and real interest rates to measure financial sector development. The Autoregressive Distributive Lag model was used as a method of estimation.
Findings: The study found that domestic credit to the private sector and interest rates were positively associated with economic growth in the short run, whereas broad money was negatively associated with economic growth in the short run. In the long run, only interest rates had a positive relationship with economic growth. Domestic credit to the private sector and broad money had negative and positive insignificant relationships with economic growth respectively. The bounds test confirmed the existence of cointegration among the study variables.
Unique Contribution to Theory, Practice and Policy: The findings imply that Zambia should focus not only on expanding financial aggregates but also on improving the quality and inclusiveness of financial intermediation. This includes enhancing access to credit for productive sectors, strengthening financial infrastructure
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Copyright (c) 2026 Chilizani Phiri, Gregory Phiri, Richard Mulenga, Chisanga Chilufya, John Mangomba
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