This study examines the impact of financial integration in Botswana. Direct and indirect transmission channels to growth are investigated. Financial integration commonly influences growth through encouraging cross border capital flows, transferring technologies and managerial expertise and promoting risk sharing. These market developments that are realized translate into enhanced access to finance as intermediation channels improve. Our empirical results are in line with previous literature in that financial depth does occur in the wake of the financial integration era and positively influences growth in Botswana. Not withholding, our results reveal that market depth has not promoted access to private sector's credit in Botswana so far. To a larger extent, a negative impact of financial integration on growth is observed as there could be short-term risks associated with increased financial openness. Nonetheless, an indirect, significant and positive influence from financial integration through financial access to growth is also observed. This indirect transmission demonstrates that financial integration increases financial innovation which in turn fosters growth in the country. Financial innovation enhances service delivery and improves access to financial services. We observe a positive influence from macroeconomic and institutional variables implying prevalence of sound and prudent supervisory structure and the rule of law in Botswana. Policy wise, there is still need and scope for greater financial integration, financial development and financial access which can contribute to national development goals of sustainable economic growth, diversification, employment creation and poverty reduction in Botswana.
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