The Role of The Banking Sector in Angola's Economic Growth

Abstract

Objective: The main objective of this research project is to analyse the role of the banking sector in Angola's economic growth over 25 years, i.e. from 1995 to 2019. In this sense, the aim was to verify whether the banking sector, in the period 1995-2019, contributed significantly to the growth of the country's economy and whether the evolution of the oil sector conditions the development of the banking sector. Theoretical Framework: Given its importance, various research studies have investigated the association between economic growth and the banking sector. This study, therefore, contributes to the empirical evidence of this relationship. Method: Various statistical techniques were used, namely determining the measures of asymmetry and kurtosis, as well as the Jarque and Bera adherence test, in order to verify the normality of the distributions of the variables used, drawing up the VAR model, identifying the number of periods (LACs) to be analysed in the Granger test and making the identification of causalities more robust, and carrying out the Granger test itself, in order to identify causal relationships between the variables studied. Results and Discussion: A very strong but negative correlation was found between GDP and the banking sector, as well as between the oil sector and the banking sector. These results show that during periods of higher economic growth (closely associated with periods of higher growth in the oil sector), there is an increase in the outflow of money from the financial system, namely through imports, decapitalising the banking sector. Conclusion: The diversification of the economy into other sectors of activity is, therefore, a priority for economic growth and the sustainability of the Angolan financial sector.