EXAMINING THE RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT, SUSTAINABLE ECONOMIC OPPORTUNITY AND ECOLOGICAL FOOTPRINT IN SADC COUNTRIES

The study empirically investigates the relationship between financial development, sustainable economic opportunity and ecological footprint in Southern African Development Community (SADC) countries. The research was carried out utilizing time series data on financial access (bank branches per 100,000 adults), financial depth (private credit by deposit money banks to GDP), financial efficiency (bank return on equity percentage, after tax), financial stability (bank Z-score), composite index for financial development, ecological footprint indicator and sustainable economic opportunity. Bootstrap panel causality procedure based on meta-analysis in heterogeneous mixed panels was employed to test causal effects. The empirical results indicate the following; (i) causality between financial development, sustainable economic opportunity and ecological footprint varies across countries with different conditions, which leads to the conclusion that SADC countries are heterogeneous in nature, (ii) for the entire panel, financial development causally affects both sustainable economic opportunity and ecological footprint, and (iii) for the entire panel, sustainable economic opportunity causally affects ecological footprint. The findings suggest introduction of modern financial institutions, especially depository and investment institutions that will stimulate financial services and not only provide funds for investments in human and physical capital required to improve sustainable economic opportunity in SADC countries, but also make funds available for research and development of more efficient ecofriendly technologies.