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Publication Information
Published by: Admin
Published: 2 months ago
View: 39
Pages: 22
ISBN: 1
Download PDF (EN)
Abstract
In this study, we attempt
to examine how transparency in the financial sector (financial sector
transparency) moderates the increasing effect of fiscal expenditure on
government debts using 23 African economies over a 16-year period. The study
employs two-step dynamic GMM panel models with additional controls for year and
country effects. The results show that
(i) FST and fiscal expenditure both increase government debts but the
combine effect of these two offers a synergetic-reducing effect on government
debts, (ii) economies with transparent financial sector systems are able to
effectively suppress the increasing effect of fiscal expenditure on government
debts and (iii) the increasing effect of
expenditure is evident in both transparent and opaque financial sector
economies though the increasing effect of fiscal expenditure is lower in
transparent financial sector systems in Africa. These
results highlight the important but unexplored government debt reducing the
effect of FST through fiscal expenditure, implying that policymakers can rely
on FST to tame the increasing effect of fiscal expenditure on government debts
while enacting laws and policies to expand the depth and coverage of FST to
harness the government debt reducing effect of FST through fiscal expenditure.
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