Nexus between Financial Market Development and Economic Growth in the SADC Region
Keywords:
Financial Market Development; Stock Market Capitalisation; Domestic Credit to Private Sector; Economic Growth; SADCAbstract
This study examined how financial market development (FMD), specifically measured by domestic credit to private sector and stock market capitalisation, impacts economic growth in the SADC region. The panel estimation method of Generalized Method of Moments (GMM) was used to empirically analyse the data collected for the period 2010 to 2024. The analysis revealed that domestic credit to the private sector negatively affects economic growth, whereas stock market capitalisation positively affects economic growth. The findings highlight that domestic credit to private sector and stock market capitalisation are crucial drivers of economic growth in the SADC region. The study recommends policy reforms to improve the efficiency of the financial sectors, including allocating more credit to productive sectors than to consumption, strengthening regulatory frameworks, and promoting regional integration to boost the stock markets of the individual SADC countries.
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