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Bank credits and non-oil economic growth: Evidence from Azerbaijan

Listed author(s):
  • Hasanov, Fakhri
  • Huseynov, Fariz

We examine the impact of bank credits on non-oil tradable sector output using aggregate data from Azerbaijan. We apply ARDL Bounds Testing approach, Engle–Granger two-step methodology, and Johansen's approach while correcting for small sample bias to test for cointegration and construct error correction models. Results from all three approaches are similar indicating that bank credits have a positive impact on non-oil tradable sectors output both in the long- and short-run. Short-run deviations are corrected to the long-run equilibrium within one quarter. Our results are useful for the macroeconomic policy makers and contribute to the literature that studies the relationship between the financial sector development and economic growth in the resource driven small open transition economies.

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File URL: http://www.sciencedirect.com/science/article/pii/S1059056013000178
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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 27 (2013)
Issue (Month): C ()
Pages: 597-610

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Handle: RePEc:eee:reveco:v:27:y:2013:i:c:p:597-610
DOI: 10.1016/j.iref.2013.02.005
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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