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Financial development and economic growth. An empirical analysis for Ireland

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  • Antonios Adamopoulos

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    (Department of Applied Informatics, University of Macedonia, Economic and Social Sciences, 34 Solonos street, P.O. 54644, Thessaloniki, Greece)

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    Abstract

    This study investigated the relationship between financial development and economic growth for Ireland for the period 1965-2007 using a vector error correction model (VECM). Questions were raised whether financial development causes economic growth or reversely taking into account the positive effect of industrial production index. Financial market development is estimated by the effect of credit market development and stock market development on economic growth. The objective of this study was to examine the long-run relationship between these variables applying the Johansen cointegration analysis taking into account the maximum eigenvalues and trace statistics tests. Granger causality tests indicated that economic growth causes credit market development, while there is a bilateral causal relationship between stock market development and economic growth. Therefore, it can be inferred that economic growth has a positive effect on stock market development and credit market development taking into account the positive effect of industrial production growth on economic growth for Ireland.

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    Bibliographic Info

    Article provided by Technological Educational Institute (TEI) of Kavala, Greece in its journal International Journal of Economic Sciences and Applied Research (IJESAR).

    Volume (Year): 3 (2010)
    Issue (Month): 1 (July)
    Pages: 75-88

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    Handle: RePEc:tei:journl:v:3:y:2010:i:1:p:75-88

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    Related research

    Keywords: financial development; economic growth; Granger causality;

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    Cited by:
    1. Greenwell Collins Matchaya & Pius Chilonda & Sibusiso Nhelengethwa, 2013. "International Trade and Income in Malawi: A Co-integration and Causality Approach," International Journal of Economic Sciences and Applied Research (IJESAR), Technological Educational Institute (TEI) of Kavala, Greece, Technological Educational Institute (TEI) of Kavala, Greece, vol. 6(2), pages 125-147, September.

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