Title: Banking development and economic growth: a time-series evidence from Namibia

Authors: Misheck Mutize; Colin Diergaardt; Latif Alhassan

Addresses: Graduate School of Business, University of Capetown (UCT), 9 Portswood Rd., Victoria and Alfred Waterfront, Cape Town, 8002, South Africa ' Graduate School of Business, University of Capetown (UCT), 9 Portswood Rd., Victoria and Alfred Waterfront, Cape Town, 8002, South Africa ' Graduate School of Business, University of Capetown (UCT), 9 Portswood Rd., Victoria and Alfred Waterfront, Cape Town, 8002, South Africa

Abstract: This study applies Granger causality test under the VECM framework on banking development indicators over the period 1991 to 2018, to examine the relationship between banking development and economic growth in Namibia. Results of the error correction model suggest a long-run relationship between banking development and economic growth, while there are no signs of short-run associations among the variables. Results of the Granger causality test indicate a lagged bidirectional causality between banking development and economic growth. These findings are consistent with the neoclassical theory of interest rate, which pronounces that interest rates are determined by the demand and the supply of loanable funds. This study thus recommends that Namibian banks reform credit policies and decrease the cost of debt to make more credit available to the private sector to sustain and stimulate economic growth.

Keywords: banking development; economic growth; Namibia; Granger causality; Africa.

DOI: 10.1504/AJESD.2026.154646

African Journal of Economic and Sustainable Development, 2026 Vol.11 No.1, pp.40 - 57

Accepted: 01 Oct 2025
Published online: 08 Jul 2026 *

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