Time-series analysis of the health outcomes-financial development nexus: Evidence from South Africa

Abstract

This study contributes to the literature by investigating the health and financial development nexus in South Africa. The ‘health is wealth’ debate was again exemplified by the outbreak of the COVID-19 pandemic, thereby raising awareness of the inescapable links between poor health and diverse threats to global socioeconomic prosperity. Thus, the influencing factors of health have continued to be studied. Accounting for structural breaks, the study estimates annual time series data sourced from the World Development Indicators within the autoregressive distributed lag error correction model (ARDL-ECM). The regression outcomes show that financial development has differential impacts on health outcomes. In particular, financial development proxied by domestic credit to the private sector has a negative effect on life expectancy at birth while reducing child mortality, thereby fostering better child health outcomes. This research engages health policy strategists on the right policy mix to achieve better health outcomes. While the financial development drive is ongoing, efforts should be intensified to improve socioeconomic determinants of health, and policy strategies aimed at solving national priority health challenges should be logically pursued.