International Journal of Business, Economics and Management

Published by: Conscientia Beam
Online ISSN: 2312-0916
Print ISSN: 2312-5772
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No. 3

Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa

Pages: 52-64
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Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa

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DOI: 10.18488/journal.62.2017.43.52.64

Citation: 2

Mohamed Jalloh , Yao Guevera

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Mohamed Jalloh , Yao Guevera (2017). Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa. International Journal of Business, Economics and Management, 4(3): 52-64. DOI: 10.18488/journal.62.2017.43.52.64
This study examines the nexus between financial deepening, interest rate spread and economic growth using data from Sub-Sahara African (SSA) countries. A dynamic panel approach is employed in estimating the parameters of the specified equation using the Sargan test of over-identification restriction in assessing the validity of the instruments used in addressing potential endogeneity problems of the data. The results show that whilst financial deepening positively drives growth, interest rate spread adversely affect growth in countries studied. In terms of relative effects, the results indicate that enhancing financial deepening by10.0 percent induces economic growth on average by a margin of 4.2 percentage points. On the contrary, however, raising interest rate spread by 10.0 percent reduces growth on average by a margin of 3.6 percentage points in countries studied. Based on these findings, there is a strong need for the implementation of policies that promote financial deepening. In particular, there is a strong need for financial authorities supervising the activities of commercial banks to ensure low interest rate spreads with a view to promoting the efficiency of banks in effectively playing their financial intermediation role to boost economic growth for poverty reduction in SSA countries.

Contribution/ Originality

Pollution Tax Under Imperfect Competition and Air Transport in a Domestic Economy

Pages: 44-51
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Pollution Tax Under Imperfect Competition and Air Transport in a Domestic Economy

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DOI: 10.18488/journal.62.2017.43.44.51

Citation: 1

Salami Dada Kareem , Odubunmi Ayoola Sunkanmi , Atoyebi Kehinde , Lawal A. Samad

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p>Basso, S., 2008. Strategic environmental policy and international trade. Journal of Public Economics, 54(3): 325-338.

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Salami Dada Kareem , Odubunmi Ayoola Sunkanmi , Atoyebi Kehinde , Lawal A. Samad (2017). Pollution Tax Under Imperfect Competition and Air Transport in a Domestic Economy. International Journal of Business, Economics and Management, 4(3): 44-51. DOI: 10.18488/journal.62.2017.43.44.51
This paper empirically demonstrates the possibility of setting up an optimal pollution tax under imperfect markets and international trade in a domestic economy. The model illustrates a situation of partial equilibrium characterized by imperfect competition among domestic producers, where the domestic good is used as an alternative for an imported polluting commodity. In this paper, we bring in the possibility that the domestic firms can introduce innovative ideas through investment in R&D. The result shows that the optimal pollution tax under domestic economic distortions is a function of a ‘domestic production effect’ and a ‘pollution effect’. The paper concludes that when the firms execute R&D expenditures, the optimal policy adds an ‘innovative effect’, which captures the change in welfare coming from a reduction in total costs and this lead our results to a win-win situation.

Contribution/ Originality
The paper contributes in the existing literature by illustrating the case of partial equilibrium characterized by imperfect market among domestic producers. It introduces innovative ideas through   the incorporation of investment in research and development. The paper concludes that under a win – win situation optimal environmental policy represent a policy tax.