The Optimal Level of Financial Growth in View of a Nonlinear Macroprudential Policy Regime Model: A Bayesian Approach
Round 1
Reviewer 1 Report
Opinion
The subject matter of the article corresponds to the section. The issues raised are topical but not so interesting. The authors conducted statistical analyses referring to existing literature research, but, in my opinion, the article in this form does not bring anything valuable. Something has been proven, but the topic of economic growth in African countries, I believe, requires deeper analysis.
With all due respect, I think that the conclusion that "First, the optimal point of financial development found in this study is the challenge to policymakers to attract technological innovation and investment in African emerging countries, thus enhancing policies aimed at improving the financial system and its effectiveness. Second, countries that are just below the threshold level are encouraged to give the financial sector adequate consideration and proper recognition, such as the provision of appropriate financial reform, as well as to work toward developing policies that aim to develop a suitable investment portfolio and increase spending on technological investment in these countries. Improving these activities will result in more job opportunities, which will boost citizens' well-being and thus economic growth." is obvious to everyone who follows at least basic economic press about Africa. Nothing new, nothing revealing.
Initially, a short description of financial systems in individual African countries (researched) was missing, as well as information on inflation and monetary policy instruments used so far, other than interest rates (currency interventions, open market operations?). Nor do I see anything about the liquidity of the banking sector, banking supervision in the countries studied, or the impact of Fed interest rates and the appreciation of the dollar, which led to a weakening of the debt sustainability of African governments and increased inflationary pressures. Moreover, the authors should, perhaps, mention that poor public services are a huge problem in African countries. Fiscal policy has no room to invest in key sectors such as infrastructure, healthcare development, and education. This certainly has an impact on economic growth. Many other economic and obviously political problems could be discussed.
Referring to the trends in the relationship between financial development and economic growth, it is worth considering J. Robinson's demand-following view and R. Lucas, who claimed that economists incorrectly pay excessive attention to the role of financial factors in economic growth. Generally, the financial system development can contribute to economic growth in two main channels: capital accumulation and technological innovation, i.e., change in total factor productivity - how does it look in the countries surveyed?
Author Response
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Author Response File: 
Author Response.docx
Reviewer 2 Report
Research subject and problem
The topic of the article can be considered to belong to the area of interest of the special issue (Perspectives of Fiscal Policy and Economic Growth in the Context of Sustainable Development). The research problem has been correctly formulated and is original. The title of the article should be changed (slightly shorter and reverse the order), e.g. "The Optimal Level of financial growth in view of nonlinear macroprudential policy regime model (Bayesian approach)."
Objectives and tasks
The main objective is indicated in the introduction. However, the sub-objectives should be clearly highlighted (bulleted). Similarly, this applies to the research tasks.
Research gaps
The rationale for the research is given in the introduction. However, strictly research gaps should be clearly indicated by briefly bulleting them: theoretical, methodological, and empirical gaps. Research gaps must be the explicit basis for the formulation of the research problem, and further the objectives and hypotheses.
Questions and hypotheses
The article does not explicitly pose research questions. The research results presented implicitly create these questions. It is worth writing them down (bulleting) and reinforcing them by stating the hypotheses that are being verified - this will increase the value of the research (but statistical proof of veracity is not necessary, the existing research results will suffice).
Methodology and data
The research used the SPSTR model enriched with the Bayesian approach. This is one of many possible insights, in part debatable, but worth familiarizing readers with its results. The modification also concerns the introduction of new factors into the model and the determination of the optimum for financial development. The above operations make this an original author's modification.
The empirical data are sufficient and extensive. This ensures the reliability of the conclusions formulated.
Interpretation of the results
The results have been discussed in an orderly and detailed manner. Their interpretation is not in doubt. They prove the achievement of the stated goals. Therefore, highlighting those conclusions that prove a specific hypothesis is worth highlighting.
Discussion and conclusions
The structure of the article needs to be changed. The discussion of the results should be a separate section. An additional section will therefore be the discussion of these results. It is worth increasing its scope, not only referring to Zungu's results (what is obvious and necessary). There are opportunities for this demonstrated in the empirical literature review (Section 2.2).
In conclusion, it is necessary to add a description of the limitations to the research conducted, as well as to indicate what new directions of research have been opened by those conducted in the article.
Structure and composition
Given the above comments and recommendations, the structure of the article requires some changes. It is necessary to introduce a section that is a discussion of the results. This should also bring the expected expansion of the article's bibliography (increase the number of items cited due to their availability and extensiveness).
Formal requirements (language, edition)
Language and writing style are generally correct. Standard editorial correction is required.
General opinion
The research problem, as well as the research methodology, are original and valuable. The approach to verification of empirical data is correct. The logic of the text and the causal sequence is correct. The scientific argument is conducted fairly. The comments raised in the review of the article should be seen as a way to increase its value.
Author Response
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Author Response File: Author Response.docx
Reviewer 3 Report
This paper analyzes the nonlinear effect of financial growth under macroprudential regime. Considering the following reasons, it is recommended to reject the paper.
1.Introduction
The introduction of the article should specify the research question, research objectives and academic contributions. Not just a simple statement of the research topic. As the authors say, the work in this paper builds on Zungu's (2022) research, incorporating more macroprudential policies into the argument. Therefore, the role of macroprudential policies should be described emphatically. Overall, this article lacks innovation and normativity.
2. Literature Review
This paper makes a detailed review of the relationship between financial growth and economic development, but the analysis of the effect of macro-prudential policies is not enough. In general, the literature review lacks logic. The biggest deficiency of this paper is the lack of a theoretical framework to analyze how financial growth affects economic development under and without macroprudential regimes. This part is the core of the paper, and the subsequent quantitative analysis is based on theoretical analysis
3. Methodology and data utilized
The article lacks a description of variables and data.
The selection of variables should be based on other studies.
The description of the data is also confusing. It is pointed out in the abstract and introduction that the research period of this paper is 1985-2021, but it is pointed out in the Methodology and data utilized that it is 1983-2021.
Meanwhile, in the Introduction, the authors point out that “Our work builds on the study documents by Zungu (2022), which examined a panel of 10 African emerging economies using the PSTR model over the period 1993–2020.”, and “We used the same African emerging countries as Zungu (2022), but extended the time frame to cover the years 1985-2021.”. But in the abstract, it points out this paper uses panel data of 15 African emerging countries from 1985-2021.
4. The authors illustrate the role of macroprudential regimes through the effects of financial growth on the economy during different periods. However, the comparison may be influenced by other factors due to different periods of observation. Especially for macro data, endogeneity problems may arise due to missing variables.
The results should be accompanied by discussion in the light of previous studies with similar and contrasting results. This paper seems to confirm the conclusions of zungu(2022), which is not surprising given that it uses the same country sample as zungu(2022) and only extends the duration of non-macroprudential regimes.
5. The author needs to add some sentences on limitations and future research directions at the end of this section.
Other minor errors:
“2. Methodology and data utilized” should be “3. Methodology and data utilized”
Author Response
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Author Response File: Author Response.docx
Reviewer 4 Report
The manuscript has got some potential. However, the manuscript needs further improved before to be accepted for publication. I has listed some specific comments that might be helpful of the author to further enhance the quality of the manuscript. Please consider the particular comments listed below.
1. The current Introduction is too simple. The author should reorganize the structure of the introduction section to thoroughly express the aspects of this study including the background, current progress, motivation, the research question, the objective, the hypotheses, the contribution, etc.
2. I suggest that the present manuscript should highlight the novelty and the value of the work performed based on comprehensive literature review. The author needs to provide a strong argument here to show their novelty contributed to the field, the entire readership and the research community.
3. The author should present the research hypotheses. The empirical results should be linked with the proposed research hypotheses.
4. The manuscript suffers from over and irrelevant referencing; the author tends to use too many references and especially secondary references throughout the manuscript which is a wrong practice. The reasonable and acceptable practice requires no more than 3 references in a sentence and they should be the one that actually contributed to the existing literature in terms of theory, methodology or both.
5. Author should provide the steps of methodology in sequence.
Author Response
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Author Response File: Author Response.docx
Round 2
Reviewer 1 Report
The Authors have focused on the given remarks and corrected the paper well enough to publish it.
Author Response
No correction were given
Reviewer 3 Report
The quality of this paper has improved a lot after revision. But I think there are still the following problems:
1. In line 246, 3.2 should be 3.1
2. Write in line 249, "the prudential policy regime as beginning in 2000 and ending in 1999". It's very confusing.
3. 3.1.1 in line 320 should read 3.2.1
4. In Figure 1, the legend has a typographical error.
5. In abstract, the authors state that 15 emerging countries in Africa were studied. However, Table 3 shows that the number of countries is 10. Meanwhile, in response to my third question, the author replied that the panel data used was from 1985 to 2021. But on page 16, line 417, non-macroprudential policies are still written from 1983 to 1999. Therefore, in my last comment, I asked the author for descriptive statistics of variables, which the author did not do.
Author Response
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Author Response File: Author Response.docx
Reviewer 4 Report
This revision has thoroughly addressed all of my concerns. I have decided that the article is suitable for publication in your journal.
Author Response
No correction were required
