The African Business Review May-Jun 2014 | Page 42

the study tests the null hypothesis of no threshold against the
alternative hypothesis of one threshold. As earlier explained,
under the null hypothesis, that is, Ho: B1 = B2, the threshold
level of FIN γ* is not identified. Thus, the classical tests have nonstandard distributions and cannot be applied. To overcome this
problem, the Bootstrap method as suggested by Hansen (2000) is
adopted to simulate the asymptotic distribution of the following
likelihood ratio test of Ho: B1 =B2.

It is imperative to say that most of the indicators are not
statistically significant. This is because the Likelihood Ratio values
are less than the C(a) value. In Algeria, Cameroun, Democratic
Republic of Congo, Ghana, Egypt, Kenya, South Africa, Tunisia
and Zambia all the three indicators (DCB, LLY and DCP) are
not significant at 5 and 10% which are given as 7.3523 and 5.9395

The continent cannot afford to wait for its
financial sectors to develop to a certain
(high) level before the perceived benefits of
FDI can start to