**Author details**

*Linear and Non-Linear Financial Econometrics - Theory and Practice*

can positively affect investments.

**5. Conclusions and recommendations**

ultimately affect the growth of the economy.

error terms.

run relationship.

**Conflict of interest**

Market power effects tend to offset the volatility nature of exchange rate, hence it

The panel ARDL results in **Table 5** confirm that lending rates are positively related to investment in the short run at a 1% level of significance. Money supply and exchange rate, on the other hand, showed no significant short-run relationship with investment (**Table 5**). Most importantly, the error correction term met the requirement of being negative and is very high at 83% and significant at 5% level. This implies that investment will be very fast to go back to equilibrium following a change in the selected monetary variables. These results are valid and reliable as mentioned in Nkoro and Uko [60] that panel ADRL has Gaussian error terms implying normal distribution, no autocorrelation and no heteroscedasticity in

The study investigated the effects of lending rates, money supply, and exchange

rate on investment activities in selected Sub-Saharan African countries for the period of 1980–2018 using panel ARDL. To test for stationarity, Levin-Lin-Chu (LLC), the Im-Pesaran-Shin (IPS), and the Fisher-ADF tests were used, and variables were found to be integrated differently with a mixture of I(0) and I(1). Pedroni, Kao, and Johansen-Fisher tests for cointegration proved that all three monetary variables were cointegrated with investment and therefore have a long-

The ARDL long-run results revealed a negative and significant relationship between lending rates and investment. Additionally, investment is positively related to both money supply and exchange rate in the long run. It can be concluded that the Sub-Saharan African region need to maintain low lending rates, increase the money supply, and keep a stable exchange rate to influence investments, which will

The study recommends that when central banks take contractionary measures, they should consider the resulting change in investment as it a crucial part of economic growth. For example, when an economy is sluggish, interest rates must not be raised to the point where investment is discouraged and assets are suppressed. The study concludes the role played by monetary variables on investment activities

We, as authors, declare that there is no conflict of interest concerning this study.

that there is a strong link between the monetary sector and the real sector.

**244**

Ombeswa Ralarala and Thobeka Ncanywa\* Department of Economics, University of Limpopo, Sovenga, South Africa

\*Address all correspondence to: thobeka.ncanywa@ul.ac.za

© 2020 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
