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The Impact of Financial Development on Economic Growth as Countries Develop Financially and Economically: WAEMU Countries Case

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  • Daouda Coulibaly

Abstract

We analyse financial development¡¯s impact on real gross domestic product per capita in seven West African Economic and Monetary Union (WAEMU) countries from 1970 to 2014. We assume that income and financial development process converge to USA, France and Japan¡¯s levels respectively. An analysis of the unit root and cointegration tests revealed non-stationary and cointegrated series. Estimates are based on the Dynamic Seemingly Unrelated Regression method (DSUR). Our study shows that, (i) the effect of financial development on real per capita GDP improves in WAEMU countries as the latter converge financially to their respective levels in USA, France and Japan; (ii) the effect of financial development on real GDP per capita decreases in the WAEMU countries as they grow economically to reach USA, France and Japan¡¯s income levels; (iii) the degree of the effect of financial development on real per capita GDP in the case of financial systems is stronger than that of the convergence of income.

Suggested Citation

  • Daouda Coulibaly, 2018. "The Impact of Financial Development on Economic Growth as Countries Develop Financially and Economically: WAEMU Countries Case," Applied Economics and Finance, Redfame publishing, vol. 5(5), pages 83-95, September.
    • Handle: RePEc:rfa:aefjnl:v:5:y:2018:i:5:p:83-95
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    More about this item

    Keywords

    financial development; solow model; growth; panel cointegration; dynamic seemingly unrelated regression;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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