Financial Liberalisation, Political Stability, and Economic Determinants of Real Economic Growth in Kenya
Abstract
:1. Introduction
2. Literature Review
3. Data and Model Specification
4. Empirical Results
5. Concluding Remarks
Author Contributions
Funding
Acknowledgments
Conflicts of Interest
References
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Period | GDP Per Capita Growth (Annual %) | Domestic Credit (% GDP) | Foreign Direct Investment (% GDP) | Gross Domestic Savings (% GDP) | Gross Capital Formation (% GDP) | Total Trade (% GDP) |
---|---|---|---|---|---|---|
1970–1979 | 3.265 | 17.926 | 0.8167 | 20.202 | 23.223 | 63.035 |
1980–1989 | 0.412 | 19.677 | 0.424 | 19.308 | 23.171 | 56.290 |
1990–1999 | −0.822 | 22.069 | 0.605 | 14.417 | 18.314 | 58.988 |
2000–2009 | 0.774 | 25.056 | 0.513 | 7.147 | 18.047 | 56.009 |
2010–2016 | 3.271 | 31.431 | 1.649 | 7.127 | 20.897 | 51.247 |
Variables | Description | Data Sources |
---|---|---|
RGDP | Represents the real GDP per capita measures in US currency at the 2010 constant basic price after taking the deflator effects. | World Development Indicators (WDI) |
COP | Represents the capital account openness which is measured in US currency. It is the sum of total foreign assets and total foreign liabilities (% of GDP). | External Wealth of Nations Mark II Database. |
FD | Represents the financial development index measured using the Principle Component Analysis (PCA) that includes the broad money, domestic credit to the private sector, domestic credit to the private sector by banks, and domestic credit provided by the financial sector (all as a % of GDP). | World Development Indicators (WDI) |
TOP | It is indicating the total countries volume of export and import as measured in US currency (% of GDP). | World Development Indicators (WDI) |
GEX | Represents the total government expenditure on final goods and services, excluding military expenditure (% of GDP). | World Development Indicators (WDI) |
PST | Represents the stability of political institutions of the country measured using a specific formulation. | Centre for Systemic Peace |
Variables | RGDP | COP | FD | TOP | GEX | PST |
---|---|---|---|---|---|---|
Mean | 7.740 | −0.450 | −0.001 | 4.043 | 2.801 | 1.977 |
Median | 7.170 | −0.452 | −0.105 | 4.024 | 2.820 | 2.197 |
Maximum | 9.148 | 0.230 | 4.102 | 4.312 | 2.986 | 3.296 |
Minimum | 6.698 | −0.891 | −3.263 | 3.604 | 2.587 | 0.000 |
Std. Dev. | 0.952 | 0.246 | 1.900 | 0.133 | 0.108 | 0.997 |
JB (p-values) | 0.051 | 0.743 | 0.383 | 0.079 | 0.216 | 0.125 |
Variables | At Level | At First Difference | ||||
---|---|---|---|---|---|---|
ADF | PP | Perron | ADF | PP | Perron | |
RGDP | −1.144 | −1.571 | −3.164 (TB: 2004) | −4.714 * | −4.672 * | −7.634 * (TB: 1993) |
COP | −1.563 | −1.465 | −3.350 (TB: 2004) | −7.813 * | −7.813 * | −10.888 * (TB: 1993) |
FD | −1.435 | −1.212 | −4.602 (TB: 2009) | −8.562 * | −8.842 * | −9.828 * (TB: 1995) |
TOP | −2.936 | −2.936 | −3.651 (TB: 1992) | −7.205 * | −7.307 * | −7.644 * (TB: 1993) |
GEX | −3.083 | −3.076 | −3.541 (TB: 1990) | −6.550 * | −8.170 * | −7.550 * (TB: 2006) |
PST | −2.548 | −2.565 | −2.874 (TB: 2006) | −6.149 * | −6.184 * | −8.057 * (TB: 1997) |
Variables | Lower Quantile | Middle Quantile | Upper Quantile | |
---|---|---|---|---|
Panel 1: RGDP | ||||
−0.101 ** (0.050) | −0.015 (0.399) | 0.024 (0.376) | 0.094 (0.192) | |
0.980 (0.353) | 0.985 (0.394) | 0.977 (0.344) | 0.997 (0.487) | |
−0.392 (0.600) | −0.601 (0.570) | −1.077 (0.430) | −0.339 (0.560) | |
QKS test | 1.405 [4.658] | |||
Panel 2: COP | ||||
−0.077 * (0.001) | 0.011 (0.371) | 0.045 *** (0.079) | 0.113 ** (0.021) | |
0.845 ** (0.048) | 0.884 (0.158) | 0.854 (0.101) | 0.884 (0.288) | |
−2.265 ** −(0.050) | −1.625 (0.270) | −2.228 ** (0.040) | −0.428 (0.610) | |
QKS test | 2.337 [4.658] | |||
Panel 3: FD | ||||
−0.413 (0.134) | 0.163 (0.285) | 0.539 ** (0.023) | 0.981 ** (0.015) | |
0.874 (0.157) | 1.016 (0.440) | 1.008 (0.471) | 0.933 (0.373) | |
−1.349 (0.160) | 0.195 (0.980) | 0.084 (0.950) | −0.377 (0.700) | |
QKS test | 2.458 [4.101] | |||
Panel 4: TOP | ||||
−0.085 * (0.000) | −0.021 (0.221) | 0.050 * (0.008) | 0.090 ** (0.046) | |
0.537 * (0.000) | 0.614 * (0.004) | 0.707 ** (0.011) | 0.627 (0.105) | |
−2.365 ** (0.040) | −2.337 *** (0.090) | −1.422 (0.320) | −0.892 (0.370) | |
QKS test | 2.401 [4.120] | |||
Panel 5: GEX | ||||
−0.045 * (0.003) | −0.009 (0.257) | 0.013 (0.152) | 0.052 * (0.000) | |
0.872 (0.163) | 0.976 (0.413) | 0.889 (0.164) | 0.888 (0.161) | |
−0.857 (0.390) | −0.206 (0.830) | −1.143 (0.409) | −0.678 (0.410) | |
QKS test | 1.581 [5.342] | |||
Panel 6: PST | ||||
0.115 ** (0.041) | 0.150 * (0.000) | 0.200 * (0.000) | 0.287 * (0.000) | |
0.931 *** (0.098) | 0.877 * (0.000) | 0.840 * (0.000) | 0.795 * (0.000) | |
−0.177 (0.190) | −10.420 * (0.000) | −7.553 * (0.000) | −9.234 * (0.000) | |
QKS test | 10.420 [4.116] |
Variables | Long-Run Estimates | ||
---|---|---|---|
OLS | FMOLS | DOLS | |
COP | −1.323 * (0.000) | −1.384 * (0.000) | −1.578 * (0.000) |
FD | −0.247 * (0.000) | −0.252 * (0.000) | −0.226 * (0.000) |
FD2 | 0.038 *** (0.073) | 0.041 * (0.004) | 0.043 ** (0.048) |
TOP | 0.310 (0.325) | 0.503 (0.136) | 0.807 (0.206) |
GEX | 3.122 * (0.000) | 2.999 * (0.000) | 2.892 * (0.006) |
PST | 0.213 * (0.000) | 0.212 * (0.000) | 0.205 ** (0.015) |
Estimated Models | EG-JOH | EG-JOH-BO-BDM | Decision |
---|---|---|---|
55.384 * | 70.781 * | Yes | |
55.310 * | 110.595 * | Yes | |
56.116 * | 76.142 * | Yes | |
56.922 * | 112.185 * | Yes | |
55.670 * | 112.459 * | Yes | |
55.349 * | 71.000 * | Yes | |
Significant level | Critical values | ||
1% | 15.701 | 29.85 | |
5% | 10.419 | 19.888 | |
10% | 8.242 | 15.804 |
Variables | Quantile Bootstraps Estimation | ||||
---|---|---|---|---|---|
COP | −0.774 * (0.035) | −1.113 * (0.005) | −1.249 * (0.000) | −1.616 * (0.004) | −2.084 * (0.000) |
FD | −0.317 * (0.000) | −0.282 * (0.000) | −0.214 * (0.000) | −0.209 * (0.000) | −0.202 * (0.000) |
FD2 | 0.069 * (0.000) | 0.061 * (0.000) | 0.039 ** (0.017) | 0.011 (0.715) | −0.013 (0.633) |
TOP | −0.055 (0.924) | 0.761 (0.302) | 0.681 (0.220) | 0.418 (0.219) | 0.468 (0.161) |
GEX | 2.621 * (0.000) | 2.437 * (0.006) | 3.691 * (0.000) | 2.360 (0.164) | 1.076 (0.420) |
PST | 0.175 * (0.009) | 0.213 * (0.009) | 0.233 * (0.003) | 0.210 * (0.000) | 0.163 * (0.001) |
Pseudo R2 | 0.699 | 0.727 | 0.793 | 0.783 | 0.747 |
Sparsity | 1.006 | 0.800 | 0.724 | 0.762 | 1.023 |
Prob. (Quasi-LR) | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 |
Variables | Quantile Bootstraps Estimation | ||||
---|---|---|---|---|---|
COP | −0.788 (0.175) | −1.695 * (0.000) | −1.483 * (0.000) | −1.294 * (0.001) | −1.454 * (0.003) |
FD | 3.017 * (0.015) | 1.079 ** (0.034) | 0.841 (0.221) | 0.735 (0.324) | 0.053 (0.957) |
TOP | 0.510 (0.570) | 0.530 (0.135) | 0.440 (0.345) | 0.520 (0.171) | 0.598 (0.126) |
GEX | 3.556 * (0.007) | 3.038 * (0.000) | 3.352 * (0.000) | 2.915 ** (0.013) | 2.001 (0.117) |
PST | 0.254 (0.140) | 0.433 * (0.000) | 0.320 * (0.000) | 0.220 * (0.003) | 0.178 * (0.019) |
(FD × COP) | 0.333 (0.560) | 0.430 * (0.009) | 0.338 (0.136) | 0.245 (0.177) | 0.365 (0.247) |
(FD × TOP) | −0.767 * (0.036) | −0.259 ** (0.050) | −0.209 (0.240) | −0.203 (0.235) | −0.023 (0.915) |
Pseudo R2 | 0.644 | 0.701 | 0.803 | 0.795 | 0.750 |
Sparsity | 1.312 | 0.612 | 0.664 | 0.729 | 1.111 |
Prob. (Quasi-LR) | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 |
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Yakubu, Z.; Loganathan, N.; Mursitama, T.N.; Mardani, A.; Khan, S.A.R.; Hassan, A.A.G. Financial Liberalisation, Political Stability, and Economic Determinants of Real Economic Growth in Kenya. Energies 2020, 13, 3426. https://doi.org/10.3390/en13133426
Yakubu Z, Loganathan N, Mursitama TN, Mardani A, Khan SAR, Hassan AAG. Financial Liberalisation, Political Stability, and Economic Determinants of Real Economic Growth in Kenya. Energies. 2020; 13(13):3426. https://doi.org/10.3390/en13133426
Chicago/Turabian StyleYakubu, Zakaria, Nanthakumar Loganathan, Tirta Nugraha Mursitama, Abbas Mardani, Syed Abdul Rehman Khan, and Asan Ali Golam Hassan. 2020. "Financial Liberalisation, Political Stability, and Economic Determinants of Real Economic Growth in Kenya" Energies 13, no. 13: 3426. https://doi.org/10.3390/en13133426