Response to Prof. Nshuti’s article on the role of the financial sector in economic development

Dear Editor To begin with, I do appreciate Prof. Nshuti’s efforts in sharing with us (readers) his insights on different subjects he has always volunteered to explain.

Dear Editor

To begin with, I do appreciate Prof. Nshuti’s efforts in sharing with us (readers) his insights on different subjects he has always volunteered to explain.

On the subject of the causal-effect relationship between financial sector and economic development, Prof Nshuti has put his time too much on theory and too little on empirical evidence to support the said theories.

Further, Prof. Nshuti clearly brings out two opposing theories on the importance/role of financial sector in economic development, where one supports the view of a positive role while the other permits a negative one. However, he fails to guide and enrich the reading audience, which is a cardinal and gracious role of knowledge endowed to knowledge needy.

Anyhow, the causal-effect relationship between financial sector/systems and economic development can go in any direction depending on a country. The financial sector role and impact on economic development, say in Rwanda could be different from that of India. It therefore suggests that to make a meaningful insight one needs to conduct a country based empirical study in order to establish the links. It is grossly an abstract to recommend a conclusion for a country based on reached conclusions of other economies with no certainty of correlated conditions.

By and large, I will mention two most obvious roles played by financial sector, Prof. Nshuti somehow did not put forward, yet their quantitative effect needs a further study in our case. One role is that of mobilizing funds for productive investment while facilitating financial flows and remittances from abroad. The second role is that of promotion of technological progress, innovation and improved resource use.

Suffice to mention here that I am not asking Prof. Nshuti to turn floodwaters into wine, but to request him to elucidate empirically the theoretical discourse of a subject matter as well as linking it to our Rwandan situation.

Kimironko Gasabo

 

Have Your SayLeave a comment