Financial sector reform and its impact on economic growth in Tanzania

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Unversity of Dar es Salaam
Much has been said and written about the link between and growth in spite of this popularity, little effort has been devoted to examining the validity of the proportion that reforming the financial sector will lead to high economic growth. More evidence is needed particularly in the context of developing rations. The purpose of this study was to research on the impact of financial sector reform on economic growth in the context of developing country, Tanzania, the study traced this impact through in the context of development and investments .it is argued that the results obtained from cross-sectional studies are not able to address this issue satisfactorily and highlight: the importance of country specific studies .Vector auto aggressive and vector error correction techniques were used to assess empirically the relationship between financial sector reform and growth of the economy in Tanzania, Using time series macroeconomic data covering the period 1967 to 2005,co-integration and various causality tests were conducted to assess the financial reform growth link by taking financial development investments, trade and human capital into account. Data for the econometric analysis were collected from official publications. Finding from the study support the view that reform the financial sector leads to economic growth and that the the growth impact of financial sector reform is bottle through financial development and investment. On the issue of causality the study results and support to the endogenous growth theorist ‘feedback hypothesis’, which suggest the existence of a two-way causal relationship between finance and growth .the finding from the study suggest therefore, that policy makers should consider the real and financial sector reform, the study opens invaluable vectors for further research.
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG187.5.T34N56)
Financial institutions, , Economic conditions, Tanzania
Nkoba, A. J. (2008) Financial sector reform and its impact on economic growth in Tanzania, Master dissertation, University of Dar es Salaam, Dar es Salaam