An Econometric Analysis of the Nexus between Credit to the Private Sector, Inflation and Economic Growth: Case of Cameroon 1965 - 2010

Mba Fokwa Arsѐne; Dazoue Dongue Guy-Paulin

Authors

Mba Fokwa Arsѐne
Dazoue Dongue Guy-Paulin

Keywords:

credit to the private sector, inflation, growth, monetary policy

Abstract

This work is centered on bringing out the link between credit to the private sector, inflation and economic growth. When lending to the economy is insufficient, it poses a problem of slow growth and when credit to the economy is too high, it poses a problem of hyper-inflation. Using data from world development indicators, it employs a Vector auto regressive model involving a system of three equations, testing for the direction of causality amongst the variables using the VAR Granger causality block exogeneity Wald Tests. The results obtain shows that inflation has a positive and significant effect on growth, economic growth has a positive and significant effect on credit to the economy and credit to the economy has a negative and significant effect on inflation. Inflation granger causes economic growth, economic growth granger causes credit to the private sector and credit to the private sector granger causes inflation.

Downloads

How to Cite

An Econometric Analysis of the Nexus between Credit to the Private Sector, Inflation and Economic Growth: Case of Cameroon 1965 - 2010. (2013). Global Journal of Management and Business Research, 13(37), 41-53. https://journalofbusiness.org/index.php/GJMBR/article/view/

Download Citation

Author Biography

Mba Fokwa Arsѐne

Mba Fokwa Arsène is an economist and researcher affiliated with the Faculty of Economics and Management, Department of Economic Policy and Analysis at the University of Dschang, Cameroon. His research spans macroeconomic policy, financial sector analysis, and development economics, with a particular focus on the Cameroonian and CEMAC regional contexts. He has authored or co-authored over a dozen scholarly articles addressing topics such as the nexus between credit, inflation, and economic growth; inflation targeting under fixed exchange rates; determinants of bank profitability; the impact of public aid on poverty reduction and economic growth; and consumer behavior regarding counterfeit products. His work employs rigorous econometric methods and panel data analysis, contributing to policy-relevant knowledge in Sub-Saharan Africa. Dr. Arsène is also known under the name Nselapi Nocheh Dieudonne and maintains an active research agenda in green agriculture, financial inclusion, and environmental sustainability.

References

Ali Acaravci, Ilhan Ozturk, Songul Acaravci (2007) Finance - Growth Nexus: Evidence from Turkey. (11), 30-40. https://doi.org/10.2139/ssrn.1401590

S. Aiyagari, M. Gertler (1985) The Backing of Government Bonds and Monetarism. 16(1), 19-44. https://doi.org/10.1016/0304-3932(85)90004-2

Banque Mondiale, World Development Indicator (2007) World Development Indicator.

Robert Barro (1995) Inflation and Economic Growth. 35, 166-176. https://doi.org/10.3386/w5326

BEAC, Etudes Statistiques (1992) Etudes et Statistiques. (301).

J. Bikai, Y. Kamgna (2011) Effets de seuils de l'inflation sur l'activité économique en CEMAC.

M. Blix (1995) Underlying Inflation: A Common Trend Approach. 23.

C. Boissieu (1990) pages 1667 à 1705.

James Bullard, John Keating (1995) The long-run relationship between inflation and output in postwar economies. 36(3), 477-496. https://doi.org/10.1016/0304-3932(95)01227-3

Claus (1997) A Measure of Underlying Inflation in the United States. 97-20.

De Gregorio, Jose, Pablo (2009) Guidotti Financial Development and Economic growth.

Stanley Fischer (1993) The role of macroeconomic factors in growth. 32(3), 485-512. https://doi.org/10.1016/0304-3932(93)90027-d

O. Fouda (2009) la surliquidité des banques en zone franc: comment expliquer le paradoxe de la CEMAC?.

M. Friedman (1968) Le rôle de la politique monétaire.

Raymond Goldsmith (1969) Financial Structure and Development.

E. James (1970) Problèmes monétaires d'aujourd'hui.

M. Kahn, M. Knight (1991) Stabilization Programs in Developing Countries: A Formal Framework. 38-85.

Leeper E, « under (1991) Equilibria under 'active' and 'passive' monetary and fiscal policies.

R. Mantsie (2003) inflation et croissance dans les pays de la CEMAC.

R. McKinnon, Shaw (1973) Money and Capital in economic development.

(1991) Monetary Dynamics: An Application of Co-integration and EC Modeling. 23, 139-154.

Modigliani, Individual F. «Life Cycle, the Wealth of Nations», American Review (1986) Life Cycle, Individual Thrift, and the Wealth of Nations. 76(2), 1-41.

K. Nubukpo (2003) L'efficacité de la politique monétaire de la banque des Etats de l'Afrique de l'Ouest depuis la libéralisation de 1989.

(2003) Pushing on a String. 1.

Sarel (1996) Nonlinear Effects of Inflation on Economic Growth. 43, 199.

E. Shaw (1973) Financial deepening in economic development.

(1967) Rational choice and patterners of growth a Monetary Economy. 534-544.

C. SIMS (1980) «Macroeconomics and Reality,» Econometrica. 48, 1.

Christopher Sims (1994) Sims C.A. : « A Simple Model for the Determination of the Price Level and the Interaction of Monetary and Fiscal Policy », Economic Theory, 4. 4(3), 381-399. https://doi.org/10.1007/bf01215378

E. Tallman, N. Chandra (1996) The Information Content of Financial Aggregates in Australia.

James Tobin (1965) Money and Economic Growth. 33(4), 671. https://doi.org/10.2307/1910352

Woodford M. (1997) Doing Without Money : Controlling Inflation in a Post-Monetary World. 6, 188.

Michael Woodford (1995) Woodford M. «Price-Level Determinacy Without Control of a Monetary Aggregate». 43, 1-46. https://doi.org/10.1016/0167-2231(95)90033-0