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Financial Development and Economic Growth: An Empirical Analysis for the UK

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  • Athanasios Vazakidis
  • Antonios Adamopoulos
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    Abstract

    This paper investigates the relationship between financial development and economic growth for UK for the period 1965-2007 using a vector error correction model (VECM). The purpose of this paper is to examine the long-run relationship between these variables applying the Johansen cointegration analysis. Granger causality tests indicated that there is a causal relationship between financial development and economic growth for UK.

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    File URL: http://www.ersj.eu/repec/ers/papers/11_2_p7.pdf
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    Bibliographic Info

    Article provided by European Research Studies Journal in its journal European Research Studies Journal.

    Volume (Year): XIV (2011)
    Issue (Month): 2 ()
    Pages: 135-148

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    Handle: RePEc:ers:journl:v:xiv:y:2011:i:2:p:135-148

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    Web page: http://www.ersj.eu/

    Related research

    Keywords: Financial Development; Economic Growth; Granger Causality;

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    1. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    2. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
    3. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
    4. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    6. Eleftherios Thalassinos & Pantelis E. Thalassinos, 2006. "Stock Markets' Integration Analysis," European Research Studies Journal, European Research Studies Journal, vol. 0(3-4), pages 3-14.
    7. Tsangyao Chang & Steven Caudill, 2005. "Financial development and economic growth: the case of Taiwan," Applied Economics, Taylor & Francis Journals, vol. 37(12), pages 1329-1335.
    8. Granger, Clive W J, 1986. "Developments in the Study of Cointegrated Economic Variables," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(3), pages 213-28, August.
    9. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
    10. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (S (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
    11. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    12. Pereira, Alfredo M & Xu, Zhenhui, 2000. "Export Growth and Domestic Performance," Review of International Economics, Wiley Blackwell, vol. 8(1), pages 60-73, February.
    13. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867-1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1.
    14. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
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