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Finance and growth: Institutional Considerations and Causality

Author

Listed:
  • Philip Arestis
  • Panicos Demetriades

    (University of East London, Department of Economics
    Keele University, Department of Economics)

Abstract

This paper re-examines the question of causality between financial development and economic growth. We argue that recent results obtained from cross-section country studies are not able to address this issue satisfactorily. Drawing on the distinction between `bank- based' and `capital-market-based' financial systems and the literature on financial repression we also argue that country specific factors are likely to influence the causal nature of the relationship between financial development and economic growth; as a result this is expected to vary across countries. We conduct cointegration and causality tests using time series data for twelve representative countries which corroborate our analysis.

Suggested Citation

  • Philip Arestis & Panicos Demetriades, "undated". "Finance and growth: Institutional Considerations and Causality," Working Papers 9605, University of East London, Department of Economics.
    • Handle: RePEc:wuk:elecwp:9605
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    More about this item

    Keywords

    Financial Development; Economic Growth;

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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