IDEAS home Printed from https://ideas.repec.org/a/anm/alpnmr/v9y2021i2p163-178.html
   My bibliography  Save this article

Financial Development and Economic Growth in BRICS-T Countries: An Econometric Application

Author

Listed:
  • Tuncer Gövdeli
  • Tuba Özkan
  • Murat Dilmaç

Abstract

In this study, the cointegration and causality relationships between economic growth and financial development were empirically analyzed using the annual data of BRICS-T countries for the period from 1991 to 2017. Access, depth, and effectiveness data, as well as the variables of Gross Fixed Capital Formation, labor force, and economic growth, representing the capital, are among the indicators representing IMF's financial development. In this empirical study, where three different models were used, the long-term relationship of capital, labor force, and one of the three indicators with economic growth was examined. In the results obtained, all of the three models were found to have cointegration relationships, and it was concluded that the variables would act together in the long term. In addition, causality relationships between access, depth and efficiency, and economic growth, which represent financial development, were also investigated in this empirical study. In the findings, it was found that economic growth was the causative of access; and that there was a two-way causality relationship between depth and economic growth, as well as between efficiency and economic growth. In light of these results, it was concluded that there was a two-way causality between financial development and economic growth.

Suggested Citation

  • Tuncer Gövdeli & Tuba Özkan & Murat Dilmaç, 2021. "Financial Development and Economic Growth in BRICS-T Countries: An Econometric Application," Alphanumeric Journal, Bahadir Fatih Yildirim, vol. 9(2), pages 163-178, December.
    • Handle: RePEc:anm:alpnmr:v:9:y:2021:i:2:p:163-178
    DOI: http://dx.doi.org/10.17093/alphanumeric.875411
    as

    Download full text from publisher

    File URL: https://www.alphanumericjournal.com/media/Issue/volume-9-issue-2-2021/financial-development-and-economic-growth-in-brics-t-countri_17iqlTC.pdf
    Download Restriction: no
    File URL: https://alphanumericjournal.com/article/financial-development-and-economic-growth-in-brics-t-countries-an-econometric-application
    Download Restriction: no
    File URL: https://libkey.io/http://dx.doi.org/10.17093/alphanumeric.875411?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Calderon, Cesar & Liu, Lin, 2003. "The direction of causality between financial development and economic growth," Journal of Development Economics, Elsevier, vol. 72(1), pages 321-334, October.
    2. Yesim Helhel, 2018. "Financial Development and Economic Growth Relationship: An Analysis with Credit Based Financial Index," Business and Economics Research Journal, Bursa Uludag University, Faculty of Economics and Administrative Sciences, vol. 9(4), pages 761-771.
    3. Peter L. Rousseau & Paul Wachtel, 2011. "What Is Happening To The Impact Of Financial Deepening On Economic Growth?," Economic Inquiry, Western Economic Association International, vol. 49(1), pages 276-288, January.
    4. 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 (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.
    5. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, vol. 97(3), pages 185-190, December.
    6. Jushan Bai & Serena Ng, 2004. "A PANIC Attack on Unit Roots and Cointegration," Econometrica, Econometric Society, vol. 72(4), pages 1127-1177, July.
    7. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    8. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    9. Yeþim Helhel, 2019. "Kýrýlgan Beþli Ülkelerde Hisse Senedi Piyasasý Geliþimi ve Ekonomik Büyüme Ýliþkisi," Isletme ve Iktisat Calismalari Dergisi, Econjournals, vol. 7(1), pages 19-29.
    10. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    11. Laura Cojocaru & Evangelos M. Falaris & Saul D. Hoffman & Jeffrey B. Miller, 2016. "Financial System Development and Economic Growth in Transition Economies: New Empirical Evidence from the CEE and CIS Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(1), pages 223-236, January.
    12. Guglielmo Maria Caporale & Christophe Rault & Anamaria Diana Sova & Robert Sova, 2015. "Financial Development and Economic Growth: Evidence from 10 New European Union Members," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 20(1), pages 48-60, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael A. Stemmer, 2017. "Revisiting Finance and Growth in Transition Economies - A Panel Causality Approach," Documents de travail du Centre d'Economie de la Sorbonne 17022, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Yilmaz Bayar & Djula Borozan & Marius Dan Gavriletea, 2021. "Banking sector stability and economic growth in post‐transition European Union countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 949-961, January.
    3. Ma, Yechi & Chen, Zhiguo & Shinwari, Riazullah & Khan, Zeeshan, 2021. "Financialization, globalization, and Dutch disease: Is Dutch disease exist for resources rich countries?," Resources Policy, Elsevier, vol. 72(C).
    4. Muhammad Sadiq & Syed Tauseef Hassan & Irfan Khan & Mohammad Mafizur Rahman, 2024. "Policy uncertainty, renewable energy, corruption and CO2 emissions nexus in BRICS-1 countries: a panel CS-ARDL approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(8), pages 21595-21621, August.
    5. Rajesh Sharma & Samaresh Bardhan, 2017. "Finance growth nexus across Indian states: evidences from panel cointegration and causality tests," Economic Change and Restructuring, Springer, vol. 50(1), pages 1-20, February.
    6. Mehmet BÖLÜKBAŞ & Mehmet Hanefi TOPAL & Hakan HOTUNLUOĞLU, 2018. "Testing Twin Deficits Hypothesis for Eu-27 and Turkey : A Panel Granger Causality Approach under Cross-sectional Dependence," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 101-119, December.
    7. Angeliki N. Menegaki, 2019. "The ARDL Method in the Energy-Growth Nexus Field; Best Implementation Strategies," Economies, MDPI, vol. 7(4), pages 1-16, October.
    8. Ullah, Assad & Dogan, Mesut & Pervaiz, Amber & Ather Bukhari, Azaz Ali & Akkus, Hilmi Tunahan & Dogan, Husna, 2024. "The impact of digitalization, technological and financial innovation on environmental quality in OECD countries: Investigation of N-shaped EKC hypothesis," Technology in Society, Elsevier, vol. 77(C).
    9. Destek, Mehmet Akif, 2019. "Investigation on the role of economic, social and political globalization on environment: Evidence from CEECs," MPRA Paper 106937, University Library of Munich, Germany.
    10. Bosah, Philip Chukwunonso & Li, Shixiang & Ampofo, Gideon Kwaku Minua, 2024. "Natural resource rents and financial inclusion nexus: Evidence from Africa," Resources Policy, Elsevier, vol. 94(C).
    11. Yilmaz Bayar & Marius Dan Gavriletea & Mirela Oana Pintea & Ioana Cristina Sechel, 2021. "Impact of Environment, Life Expectancy and Real GDP per Capita on Health Expenditures: Evidence from the EU Member States," IJERPH, MDPI, vol. 18(24), pages 1-14, December.
    12. Chen Qian & Ghulam Rasool Madni, 2022. "Encirclement of Natural Resources, Green Investment, and Economic Complexity for Mitigation of Ecological Footprints in BRI Countries," Sustainability, MDPI, vol. 14(22), pages 1-15, November.
    13. Mohammed Musah, 2023. "Stock market development and environmental quality in EU member countries: a dynamic heterogeneous approach," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11153-11187, October.
    14. Alper Yılmaz, 2023. "Carbon emissions effect of trade openness and energy consumption in Sub-Saharan Africa," SN Business & Economics, Springer, vol. 3(2), pages 1-28, February.
    15. Mehmood, Usman, 2021. "Contribution of renewable energy towards environmental quality: The role of education to achieve sustainable development goals in G11 countries," Renewable Energy, Elsevier, vol. 178(C), pages 600-607.
    16. Mohammad Mafizur Rahman & Istihak Rayhan & Nahid Sultana, 2023. "How Does Electricity Affect Economic Growth? Examining the Role of Government Policy to Selected Four South Asian Countries," Energies, MDPI, vol. 16(3), pages 1-17, February.
    17. Charalampos Agiropoulos & Michael L. Polemis & Michael Siopsis & Sotiris Karkalakos, 2022. "Revisiting the finance‐growth nexus: A socioeconomic approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 2762-2783, July.
    18. Anjan Kumar Sahu & Mantu Kumar Mahalik, 2025. "What drives more for macroeconomic instability-carbon inequality or income inequality? Panel evidence from emerging economies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(6), pages 12653-12676, June.
    19. Emmanuel Baffour Gyau & Yaya Li & Michael Appiah, 2025. "Global digital transformation: discovering the impact of digitalization on income inequality in OECD countries, the moderating role of globalization," Economic Change and Restructuring, Springer, vol. 58(1), pages 1-37, February.
    20. Jean-Fran ois Hoarau & Nicolas Lucic, 2022. "Are real merchandise imports per capita a good predictor for the standard of living for the small island world: Testing for the imports-led growth and the growth-led imports hypotheses in panels over ," TEPP Working Paper 2022-16, TEPP.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anm:alpnmr:v:9:y:2021:i:2:p:163-178. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bahadir Fatih Yildirim (email available below). General contact details of provider: https://www.alphanumericjournal.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.