Does Supply-Leading Hypothesis Holds in South Africa? Evidence from ARDL Estimation Technique

Hamisu Sadi ALI, Abba N. ZUBAIRU, Yakubu J. ABDULLAHI

Abstract


Abstract. Using ARDL bound test procedure the present study investigates whether economic growth influences financial sector development through stock market development in South Africa for the period of 2005 to 2014.The finding shows that growth of the economy enhances financial sector development through stock market medium in South Africa both in short run and long-run phenomenon. The finding confirmed the existence of Joan Robison (1952) supply leading hypothesis in the country investigated. The policy implication is that the authority in this country needs to put additional efforts in policies that will boost the overall performance of the economy considering its positive influence on financial sector development via stock market boost. Effective policies that will enhance the competitiveness of the stock market performance are essential ingredient that will boost the performance of the stock market and hence will have multiplier effect on the overall economy.

Keywords. Financial Development, Economic growth, ARDL, Cointegration, South Africa.

JEL. F40, F43, F63.



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DOI: http://dx.doi.org/10.1453/jeb.v2i4.545

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