Doumbe Doumbe Eric, Zhao Zhongxiu

(University of International Business and Economics, Beijing, China)

 

 

Abstract: There is a given stark discrepancy between financial development in rich and poor countries which has led to numerous empirical and theoretical works that have stressed on the contribution of the financial sector in economic development. For developing economies, while many researches have focused on the linkage between financial development and economic growth, not much has been done to examine the link between financial development and industrial growth. The proposed study examines the causal relationship between the financial sector development and industrialization in Cameroon. Based on the aggregate production framework and Autoregressive Distributed Lag (ARDL) cointegration technique for Cameroonian time series data from 1970-2014, the paper establishes a cointegration relationship between the financial sector development data and industrial output data. The aim of this study is to provide some empirical evidence on the causality relationship between financial development and industrialization in a developing country. Our findings confirm the outcomes of some scholars, who found that financial development impacts the investment, hence the industrialization. We found that for Cameroon, nominal deposit rate influences the industrialization both in the short run and in the long, while the impact of bank deposits is just seen in the short run.

 

 

Key words: financial development; industrialization; ARDL; Cameroon

 

JEL codes: O55, L60