The Role of Financial Development on Economic Growth in South Africa

South Africa has long been a prominent example of economic growth, unlike other African countries. Therefore, this study investigates the financial development-economic growth link employing time-series techniques over the period 1990-2022. It also incorporates energy efficiency, trade openness, and government spendings into the economic growth model. The study uses the ARDL bounds test to analyze the cointegration relationship and the FMOLS estimator for long-term coefficient estimates. The estimates suggest that financial development accelerates economic growth. Therefore, the "financial development-driven economic growth" hypothesis is proven for the South African economy. The estimates also suggest that energy efficiency, trade openness, and government spendings support economic growth. These results may offer important recommendations for growth policies in the South African economy.