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The Influence of Bank Loans and Deposits on Ecuador’s Economic Growth: A Cointegration Analysis

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  • Freddy Naula

    (Facultad de Ciencias Económicas y Administrativas, Universidad de Cuenca, Cuenca 010203, Ecuador)

  • Cristian Zamora

    (Facultad de Ciencias Químicas, Universidad de Cuenca, Cuenca 010203, Ecuador)

  • Kevin Gomez

    (Facultad de Ciencias Económicas y Administrativas, Universidad de Cuenca, Cuenca 010203, Ecuador)

Abstract

This study examines the relationship between banking sector development (credit and deposits) and economic growth in Ecuador, using quarterly data for the period 2000–2022. An ARDL approach with Bound Test cointegration is employed, incorporating structural breaks using the Bai–Perron test and controlling for macroeconomic shocks. In addition, time transformation methodologies are applied to harmonize the frequency of the series: the monthlyization of GDP is performed using the Chow-Lin method, and the imputation of missing unemployment data using the Kalman filter. The results reveal a significant long-run elasticity between bank deposits and GDP (0.45%), while credits do not present a statistically significant effect, possibly due to high delinquency and institutional weakness. Granger causality tests confirm a unidirectional relationship between banking variables to economic growth. These findings highlight the importance of strengthening financial supervision and improving institutional quality to enhance the effect of bank intermediation. The study provides robust and contextualized empirical evidence relevant to resource-dependent economies with concentrated financial systems, contributing to the debate on the relationship between finance and growth in developing countries.

Suggested Citation

  • Freddy Naula & Cristian Zamora & Kevin Gomez, 2025. "The Influence of Bank Loans and Deposits on Ecuador’s Economic Growth: A Cointegration Analysis," IJFS, MDPI, vol. 13(2), pages 1-17, May.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:2:p:76-:d:1648135
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    References listed on IDEAS

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    1. Olu Ajakaiye & Finn Tarp, 2012. "Finance and Economic Development in Africa: Introduction and Overview," Journal of African Economies, Centre for the Study of African Economies, vol. 21(suppl_1), pages -9, January.
    2. Javier Solano & Segundo Camino-Mogro & Grace Armijos-Bravo, 2020. "Intra-banking competition in Ecuador: new evidence using panel data approach," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 25(50), pages 295-319, June.
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