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Further evidence on finance-growth causality: A panel data analysis

  • Bangake, Chrysost
  • Eggoh, Jude C.

This paper reassesses the causal relationship between financial development and economic growth. Using recently developed panel methods on a data set of 71 developed and developing countries over the period 1960-2004, our study confirms previous results of a bidirectional causality between finance and growth. In addition, we show significant differences among country groups when considering both long-run and short-run causality. While in low and middle income countries there is no supportive evidence of short-run causality between financial development and economic growth, in high income countries economic growth significantly affects financial development.

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Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 35 (2011)
Issue (Month): 2 (June)
Pages: 176-188

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Handle: RePEc:eee:ecosys:v:35:y:2011:i:2:p:176-188
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