Determinants of Short-Term Foreign Debt in Ghana
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Date
2017-04-30
Authors
-Insaidoo, William Gabriel Brafu
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
This study tests the validity of the hypothesis that the regulatory and macroeconomic
environments and the disparity between domestic and international interest rates are
important determinants of short-term foreign debt stock in Ghana. This involves a time
series econometric analysis of annual secondary data covering the period 1970 to 2012.
More specifically, the bounds testing approach is used to estimate the impact of potential
determinants – identified in the theory and empirical literature – on the real stock of shortterm foreign debt in Ghana. The study finds that a reduction in regulatory restrictions
on external borrowing, a widening of the disparity between domestic and international
interest rates, economic growth performance and domestic financial deepening lead to
increases in the short-term foreign debt stock in both the long and short run, respectively.
The short-term foreign debt stock reduces in response to an increase in trade openness
in the short run, and to international debt relief initiatives by multilateral development
institutions in the long run.
Description
Keywords
Capital accounts liberalization, , short-term foreign debt, , foreign borrowing