Abstract
M.Comm.
This paper empirically examines the effect of financial development on growth in the SADC during the period
1993-2003. To perform this analysis, the study employed a single indicator of financial development, i.e.
financial deepening and applied balanced panel model data using a suite of panel models: Ordinary Least
Square (OLS), Least Square Dummy Variable (LSDV) and Random Effect Model (REM) econometric
methodologies. The results of the study support the view that financial development positively affects economic
growth both including and excluding South Africa. This finding suggests that the financial reforms launched in
the 1990s can to a certain extent explain the rebound in the economic performance since then. However, further
deepening of the financial sector through more financial liberalization in the SADC region will be an important
instrument in stimulating investment through more savings and therefore more long-run economic growth.