Revisiting the Causal link Between Agriculture, Industrial output and Financial Sector Development in South Africa

Authors

  • Mabutho Sibanda Finance, College of Law & Management Studies, University of KwaZulu-Natal, Durban
  • Zamanguni Gumede Taxation, College of Law & Management Studies, University of KwaZulu-Natal, Durban
  • Bomi Nomlala Auditing, College of Law & Management Studies, University of KwaZulu-Natal, Durban
  • Msizi Mkhize Financial Accounting, College of Law & Management Studies, University of KwaZulu-Natal, Durban
  • Hlengiwe Ndlela Auditing, College of Law & Management Studies, University of KwaZulu-Natal, Durban

Keywords:

Granger Causality, agricultural output, industrial output, financial development.

Abstract

This study seeks to establish the relationship between agriculture, industrial output and financial sector development in South Africa. It uses the Autoregressive Distributed Lag, Error Correction models and Granger causality techniques to test for long- and short-run relationships. The evidence from the models indicates the presence of a long-run relationship between industrial output and agriculture, which suggests that these sectors depend on each other for raw materials and inputs. In addition, stock market development represented by market capitalization has a long-run relationship with agriculture. However, no long-run relationship is established between credit extension and agriculture; and between gross fixed capital formation and agriculture, suggesting that an increase in agricultural output does not impact investment in long-term fixed assets. The evidence also shows a long-run relationship between exports and agricultural output, which is consistent with the export-led growth hypothesis. These findings have implications for policy formulation and allocation of resources.

Downloads

Published

2019-12-31

How to Cite

Sibanda, M., Gumede, Z., Nomlala, B., Mkhize, M., & Ndlela, H. (2019). Revisiting the Causal link Between Agriculture, Industrial output and Financial Sector Development in South Africa. Journal of Reviews on Global Economics, 8, 1258–1267. Retrieved from https://lifescienceglobalca.com/index.php/jrge/article/view/6316

Issue

Vol. 8 (2019)

Section

Special Issue - Africa’s Economic Development Agenda and Sustainable Growth

License

Policy for Journals/Articles with Open Access

Authors who publish with this journal agree to the following terms:

  • Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

  • Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work

Policy for Journals / Manuscript with Paid Access

Authors who publish with this journal agree to the following terms:

  • Publisher retain copyright .

  • Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work .