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Walid Benayed and Foued Badr Gabsi
''Domestic public debt and financial development in Sub-Saharan Africa: Is there an inverted-U relationship?''
( 2020, Vol. 40 No.1 )
This paper assesses the nonlinear effect of domestic public debt on financial development using a panel of 20 low-income Sub-Saharan African countries over the period 2000-2010. Based on the framework proposed by Lind and Mehlum (2010), our analysis confirms the existence of an inverted-U relationship between domestic public debt and bank credit to the private sector with a threshold of about 52 % of GDP. The regression results are robust across different specifications and diverse estimation techniques.
Keywords: domestic public debt, financial development, an inverted-U relationship, panel data.
JEL: H6 - National Budget, Deficit, and Debt: General
Manuscript Received : Jul 28 2019 Manuscript Accepted : Mar 25 2020

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