Abstract:
This paper analyses the causal relationship between financial development and economic
growth in Botswana for the period 1977 to 2006, using Granger causality through
cointegrated Vector Autoregression methods. The results show that there is a stable longrun relationship between financial development and economic growth. Financial
development causes economic growth in Botswana. The causality runs from financial
development to economic growth. The results suggest that the financial sector is
important in the economic growth and development of Botswana. Financial
intermediation and institutional financial reforms should be enhanced in order to promote Botswana’s economic growth.
