THE FINANCIAL DEVELOPMENT-INVESTMENT-SAVINGS AND ECONOMIC GROWTH MULTIVARIATE CAUSAL NEXUS IN TANZANIA AND KENYA

Abstract

This paper evaluates the dynamic causal relationship between financial development,
savings, investment and economic growth in Tanzania and Kenya from 1990-2017 by
employing a multivariate Granger-causality model. The results show that for both Tanzania
and Kenya, investment precedes financial development in the short run and hence
investment influences the economic growth than financial sector development. The paper
recommends that both countries should address credit provision to enhance savings,
investment and economic growth.