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The Relationship between Financial Development and Economic Growth for Developing Countries: Panel Causality Analysis

Author

Listed:
  • Filiz ERATAŞ-SÖNMEZ
  • Yağmur SAĞLAM

Abstract

The study aims to examine the relationship between financial development and economic growth in developing countries. In this context, an econometric model has been formed using the financial development index and economic growth variables. Due to the complex nature of the financial system, non-stationary panel data analysis is employed in the empirical model. In the long run, a one-way causality relationship from financial development to economic growth is observed. The findings are in line with the supply-driven approach, which argues for that financial development positively affects economic growth.

Suggested Citation

  • Filiz ERATAŞ-SÖNMEZ & Yağmur SAĞLAM, 2019. "The Relationship between Financial Development and Economic Growth for Developing Countries: Panel Causality Analysis," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(42).
    • Handle: RePEc:sos:sosjrn:190405
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Development; Financial Development Index; Economic Growth; Panel Data Analysis; Panel Causality Analysis;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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