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Financial Markets and Economic Growth in Greece

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Author Info

  • George Hondroyiannis

    () (Bank of Greece, Economic Research Department)

  • Sarantis Lolos

    (Department of Economics and Regional Development,Panteion University)

  • Evangelia Papapetrou

    (Bank of Greece, Economic Research Department and University of Athens, Department of Economics)

Abstract

This paper assesses empirically the relationship between the development of the banking system and the stock market and economic performance for the case of Greece over the period 1986-1999. Greece is a medium sized EU country where the financial liberalization process started back in the early eighties. The empirical results, using VAR models, suggest that there exists a bi-directional causality between finance and growth in the long run. The findings, using error-correction models, show that both bank and stock market financing can promote economic growth, in the long run, although their effect is small. Furthermore, the contribution of stock market finance to economic growth appears to be substantially smaller compared to bank finance.

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File URL: http://www.bankofgreece.gr/BogEkdoseis/Paper200417.pdf
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Bibliographic Info

Paper provided by Bank of Greece in its series Working Papers with number 17.

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Length: 26 pages
Date of creation: Sep 2004
Date of revision:
Publication status: Published in Journal of International Financial Markets, Institutions and Money, 2005, 15 (2),pp. 173-188.
Handle: RePEc:bog:wpaper:17

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Web page: http://www.bankofgreece.gr
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Keywords: Financial Development; Economic Growth; VAR;

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References

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