The Effect of the Banking Sector on the Ethiopian Economy: an Empirical Analysis
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Date
2017-06
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Abstract
The main objective of the study was to examine empirically the effect of banking sector on the
real economy in Ethiopia over the period 1980-2015. The ARDL approach to Co-integration and
Error Correction Model are employed to investigate both the long run and short run
relationships. Goodness of fit of the estimated equation, Stability of the estimated model,
Breusch-Godfrey Serial Correlation LM Test, Heteroskedasticity test: Breusch-Pagan-Godfrey
and Normality Test has been also conducted and the model did not experience any problem. The
Bounds test showed there is a stable long run relationship between real GDP, private sector
credit, domestic credit to the government. Gross capital formation and regime change/system
change. The estimated ARDL model has confirmed significantly positive effect of proxies on real
GDP. However, private sector credit to GDP(%) has shown negative contribution to real GDP.
The short run, coefficient of error correction term justified about 28 percent of disequilibrium
annually converge towards long run equilibrium in the current year.
Description
A thesis submitted to college of Business and Economics of Addis Ababa
University in partial fulfillment of the requirement for a Master of Business
Administration
Keywords
Banking Sector, Economy, Empirical Analysis