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The Relationship between Domestic Credit and Income: Evidence from Latin America

  • Gozgor,G.
  • Gozgor, K.

In this paper, we examine the relationship between the domestic credit by banking sector and Gross Domestic Product (GDP) per capita in the balanced panel framework of 20 Latin America countries from 1960 to 2010. Panel Cointegration tests of Kao (1999), Maddala and Wu (1999) and Westerlund (2006, 2007) suggest that there is a significant long-run relationship between the domestic credit and the GDP per capita in Latin America countries. Furthermore, results from panel causality tests indicate that there is a unidirectional causation which runs from domestic credit to the GDP per capita.

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Article provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.

Volume (Year): 13 (2013)
Issue (Month): 1 ()
Pages: 89-98

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Handle: RePEc:eaa:aeinde:v:13:y:2013:i:1_8
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  7. McCaig, Brian & Stengos, Thanasis, 2005. "Financial intermediation and growth: Some robustness results," Economics Letters, Elsevier, vol. 88(3), pages 306-312, September.
  8. Westerlund, Joakim, 2005. "Testing for Error Correction in Panel Data," Working Papers 2005:11, Lund University, Department of Economics.
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  18. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
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