Abstract

The effect of financial development on economic growth coupled with exchange rate fluctuation on economic growth can be significant in a country. We investigated the impact of the economic credits on the inflation and economic growth in Togo. We endeavored to bring out the nature of the relationship between changes in credit to the economy and inflation level and analyzed the effect of credit to economic growth. To achieve this objective we used two approaches. First, the theoretical approach, which showed that the economy is simultaneously facing high inflation rate and low economic grow rate. Secondly, in the empirical approach, it appeared that the impact of credit to the economy on inflation and growth depended on many factors that are unique. We utilized panel data and a model of the production function of Cobb Douglas with technological progress to investigate the impact of change in credit level on change in inflation level and on economic growth in Togo. The time series analysis was based on some economic test that assisted us to the choice of correct model.  We realized that inflation has no significant effect on the economic credit. However, any economic growth improvement influenced negatively the economic credits, hence confirming the fact that Togolese economic growth carrier sectors benefited only a bit from the economic credits.

Key words: Economic Credits, Inflation, Economic Growth, Togo.