The Financial Determinants of Private Sector Investment: The Case of Ethiopia

Brhane Teklay

doi:doi:10.11648/j.ijsts.20170503.14

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The Financial Determinants of Private Sector Investment: The Case of Ethiopia

Brhane Teklay

Published in International Journal of Science, Technology and Society (Volume 5, Issue 3)

Received: 12 October 2016 Accepted: 1 April 2017 Published: 27 May 2017

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Abstract

This study mainly emphasized on the financial determinants of private sector investment in Ethiopia using annual time series data from 1975-2015. Using Johansen co integration test they have a significant relationship among variables and OLS regression analysis was undertake to estimate long run model and ECM has been used to find out the short run dynamics. In both long run and short run model the financial determinants variable like broad money supply, bank credit and availability of foreign exchange were positive relation with the private investment. The other macro variable taken was the capital expenditure, which is negatively affect in the long run and positively affect private investment in the short run. The researchers conclude based on past literature result’s capital expenditure is positively association with private investment. The short run dynamics of estimated coefficient ECM which suggests a relatively quick speed of adjustment back to the long-run equilibrium. The findings of the study provide evidence that private investment in Ethiopia, like in other developing countries is affected by important financial and macroeconomic variables. The empirical evidence however has certain important policy implications, and in view of that recommendations have also been provided, in an attempt to help increase and stimulate private investment in Ethiopia.

Published in	International Journal of Science, Technology and Society (Volume 5, Issue 3)
DOI	10.11648/j.ijsts.20170503.14
Page(s)	46-54
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Ethiopia, Private Investment, Financially Determinants, Johannes Co-integration

References

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[10]	Fowowe, B. (2011). Financial Sector Reforms and Private Investment in Sub-Saharan African Countries. Journal of Economic Development, Volume 36, Number 3.
[11]	Geda, A. (2006), “The structure and performance of Ethiopia's financial sector in the pre- and post-reform period with a special focus on banking” UNU-WIDER, United Nations University (UNU), No. 2006/112 ISBN 9291908967.
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Brhane Teklay. (2017). The Financial Determinants of Private Sector Investment: The Case of Ethiopia. International Journal of Science, Technology and Society, 5(3), 46-54. https://doi.org/10.11648/j.ijsts.20170503.14

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ACS Style

Brhane Teklay. The Financial Determinants of Private Sector Investment: The Case of Ethiopia. Int. J. Sci. Technol. Soc. 2017, 5(3), 46-54. doi: 10.11648/j.ijsts.20170503.14

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Brhane Teklay. The Financial Determinants of Private Sector Investment: The Case of Ethiopia. Int J Sci Technol Soc. 2017;5(3):46-54. doi: 10.11648/j.ijsts.20170503.14

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@article{10.11648/j.ijsts.20170503.14,
  author = {Brhane Teklay},
  title = {The Financial Determinants of Private Sector Investment: The Case of Ethiopia},
  journal = {International Journal of Science, Technology and Society},
  volume = {5},
  number = {3},
  pages = {46-54},
  doi = {10.11648/j.ijsts.20170503.14},
  url = {https://doi.org/10.11648/j.ijsts.20170503.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijsts.20170503.14},
  abstract = {This study mainly emphasized on the financial determinants of private sector investment in Ethiopia using annual time series data from 1975-2015. Using Johansen co integration test they have a significant relationship among variables and OLS regression analysis was undertake to estimate long run model and ECM has been used to find out the short run dynamics. In both long run and short run model the financial determinants variable like broad money supply, bank credit and availability of foreign exchange were positive relation with the private investment. The other macro variable taken was the capital expenditure, which is negatively affect in the long run and positively affect private investment in the short run. The researchers conclude based on past literature result’s capital expenditure is positively association with private investment. The short run dynamics of estimated coefficient ECM which suggests a relatively quick speed of adjustment back to the long-run equilibrium. The findings of the study provide evidence that private investment in Ethiopia, like in other developing countries is affected by important financial and macroeconomic variables. The empirical evidence however has certain important policy implications, and in view of that recommendations have also been provided, in an attempt to help increase and stimulate private investment in Ethiopia.},
 year = {2017}
}

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TY  - JOUR
T1  - The Financial Determinants of Private Sector Investment: The Case of Ethiopia
AU  - Brhane Teklay
Y1  - 2017/05/27
PY  - 2017
N1  - https://doi.org/10.11648/j.ijsts.20170503.14
DO  - 10.11648/j.ijsts.20170503.14
T2  - International Journal of Science, Technology and Society
JF  - International Journal of Science, Technology and Society
JO  - International Journal of Science, Technology and Society
SP  - 46
EP  - 54
PB  - Science Publishing Group
SN  - 2330-7420
UR  - https://doi.org/10.11648/j.ijsts.20170503.14
AB  - This study mainly emphasized on the financial determinants of private sector investment in Ethiopia using annual time series data from 1975-2015. Using Johansen co integration test they have a significant relationship among variables and OLS regression analysis was undertake to estimate long run model and ECM has been used to find out the short run dynamics. In both long run and short run model the financial determinants variable like broad money supply, bank credit and availability of foreign exchange were positive relation with the private investment. The other macro variable taken was the capital expenditure, which is negatively affect in the long run and positively affect private investment in the short run. The researchers conclude based on past literature result’s capital expenditure is positively association with private investment. The short run dynamics of estimated coefficient ECM which suggests a relatively quick speed of adjustment back to the long-run equilibrium. The findings of the study provide evidence that private investment in Ethiopia, like in other developing countries is affected by important financial and macroeconomic variables. The empirical evidence however has certain important policy implications, and in view of that recommendations have also been provided, in an attempt to help increase and stimulate private investment in Ethiopia.
VL  - 5
IS  - 3
ER  -

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Author Information

Brhane Teklay

National Bank of Ethiopia, Applied Economic Modelling and Forecasting (MA), Addis Ababa University, Addis Ababa, Ethiopia

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Brhane Teklay. (2017). The Financial Determinants of Private Sector Investment: The Case of Ethiopia. International Journal of Science, Technology and Society, 5(3), 46-54. https://doi.org/10.11648/j.ijsts.20170503.14

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ACS Style

Brhane Teklay. The Financial Determinants of Private Sector Investment: The Case of Ethiopia. Int. J. Sci. Technol. Soc. 2017, 5(3), 46-54. doi: 10.11648/j.ijsts.20170503.14

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AMA Style

Brhane Teklay. The Financial Determinants of Private Sector Investment: The Case of Ethiopia. Int J Sci Technol Soc. 2017;5(3):46-54. doi: 10.11648/j.ijsts.20170503.14

Copy | Download

@article{10.11648/j.ijsts.20170503.14,
  author = {Brhane Teklay},
  title = {The Financial Determinants of Private Sector Investment: The Case of Ethiopia},
  journal = {International Journal of Science, Technology and Society},
  volume = {5},
  number = {3},
  pages = {46-54},
  doi = {10.11648/j.ijsts.20170503.14},
  url = {https://doi.org/10.11648/j.ijsts.20170503.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijsts.20170503.14},
  abstract = {This study mainly emphasized on the financial determinants of private sector investment in Ethiopia using annual time series data from 1975-2015. Using Johansen co integration test they have a significant relationship among variables and OLS regression analysis was undertake to estimate long run model and ECM has been used to find out the short run dynamics. In both long run and short run model the financial determinants variable like broad money supply, bank credit and availability of foreign exchange were positive relation with the private investment. The other macro variable taken was the capital expenditure, which is negatively affect in the long run and positively affect private investment in the short run. The researchers conclude based on past literature result’s capital expenditure is positively association with private investment. The short run dynamics of estimated coefficient ECM which suggests a relatively quick speed of adjustment back to the long-run equilibrium. The findings of the study provide evidence that private investment in Ethiopia, like in other developing countries is affected by important financial and macroeconomic variables. The empirical evidence however has certain important policy implications, and in view of that recommendations have also been provided, in an attempt to help increase and stimulate private investment in Ethiopia.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - The Financial Determinants of Private Sector Investment: The Case of Ethiopia
AU  - Brhane Teklay
Y1  - 2017/05/27
PY  - 2017
N1  - https://doi.org/10.11648/j.ijsts.20170503.14
DO  - 10.11648/j.ijsts.20170503.14
T2  - International Journal of Science, Technology and Society
JF  - International Journal of Science, Technology and Society
JO  - International Journal of Science, Technology and Society
SP  - 46
EP  - 54
PB  - Science Publishing Group
SN  - 2330-7420
UR  - https://doi.org/10.11648/j.ijsts.20170503.14
AB  - This study mainly emphasized on the financial determinants of private sector investment in Ethiopia using annual time series data from 1975-2015. Using Johansen co integration test they have a significant relationship among variables and OLS regression analysis was undertake to estimate long run model and ECM has been used to find out the short run dynamics. In both long run and short run model the financial determinants variable like broad money supply, bank credit and availability of foreign exchange were positive relation with the private investment. The other macro variable taken was the capital expenditure, which is negatively affect in the long run and positively affect private investment in the short run. The researchers conclude based on past literature result’s capital expenditure is positively association with private investment. The short run dynamics of estimated coefficient ECM which suggests a relatively quick speed of adjustment back to the long-run equilibrium. The findings of the study provide evidence that private investment in Ethiopia, like in other developing countries is affected by important financial and macroeconomic variables. The empirical evidence however has certain important policy implications, and in view of that recommendations have also been provided, in an attempt to help increase and stimulate private investment in Ethiopia.
VL  - 5
IS  - 3
ER  -

Copy | Download