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The Impact of Financial Instablity on Economic Growth: BRICT Economies

Author

Listed:
  • Erataş Sönmez, Filiz

    (Manisa Celal Bayar University)

  • Uysal, Doğan

    (Manisa Celal Bayar University)

Abstract

The aim of this study is to investigate the impact of financial instability on economic growth. Depart from the hypothesis that financial instability affects economic growth negatively, firstly the definition of instability is made and then focused on the causes of instability to understand a conceptual framework better. In this study, non-stationary dynamic panel data analysis has been used to analyze not only examine the heterogeneity of the variables but also to consider cross-section dependency between cross section units. The second-generation panel unit root tests are utilized in this model, the long-term regression coefficients have been estimated and panel causality analysis is used to determine the direction of the causality relationship between the economic growth and financial instability. The empirical findings of the study support the hypothesis which suggest that financial instability has adverse effects on economic growth.

Suggested Citation

  • Erataş Sönmez, Filiz & Uysal, Doğan, 2018. "The Impact of Financial Instablity on Economic Growth: BRICT Economies," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 9(1), pages 25-48, January.
    • Handle: RePEc:ris:buecrj:0311
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    Cited by:

    1. Meshesha Demie Jima & Patricia Lindelwa Makoni, 2023. "Causality between Financial Inclusion, Financial Stability and Economic Growth in Sub-Saharan Africa," Sustainability, MDPI, vol. 15(2), pages 1-13, January.

    More about this item

    Keywords

    Financial Instability; Economic Growth; Panel Data Analysis; BRICT;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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