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The Impact of European Monetary Union on Finance-Growth Nexus

Author

Listed:
  • Saeed Armin

    ()

  • Saifuzzaman Ibrahim

    ()

  • W. Azman-Saini

    ()

Abstract

This study examines the relationship between financial development and economic growth in 15 developed European countries before and after the formation of the euro. The results of the panel data analysis show that financial development is significant in promoting economic growth for both periods. The impact of the banking sector development on growth, however, is greater in the post-euro period, whereas the impact of stock market development on growth is reducing in the period investigated. The study concludes that the formation of European Monetary Union does not weaken the relationship between financial development and economic growth in developed European countries. Copyright Springer-Verlag Wien 2013

Suggested Citation

  • Saeed Armin & Saifuzzaman Ibrahim & W. Azman-Saini, 2013. "The Impact of European Monetary Union on Finance-Growth Nexus," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(3), pages 347-356, February.
  • Handle: RePEc:spr:trstrv:v:19:y:2013:i:3:p:347-356
    DOI: 10.1007/s11300-012-0249-z
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    References listed on IDEAS

    as
    1. Elias Papaioannou & Richard Portes, 2008. "Costs and benefits of running an international currency," European Economy - Economic Papers 2008 - 2015 348, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Beck, Thorsten & Levine, Ross, 2004. "Stock markets, banks, and growth: Panel evidence," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 423-442, March.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    4. Ray Barrell & Simon Kirby & Iana Liadze, 2008. "The Oil Intensity of Output," National Institute Economic Review, National Institute of Economic and Social Research, vol. 205(1), pages 34-38, July.
    5. Demetriades, Panicos O. & Hussein, Khaled A., 1996. "Does financial development cause economic growth? Time-series evidence from 16 countries," Journal of Development Economics, Elsevier, vol. 51(2), pages 387-411, December.
    6. Jappelli, Tullio & Pagano, Marco, 2008. "Financial market integration under EMU," CFS Working Paper Series 2008/33, Center for Financial Studies (CFS).
    7. Hein, Eckhard & Truger, Achim, 2005. "European Monetary Union: nominal convergence, real divergence and slow growth?," Structural Change and Economic Dynamics, Elsevier, vol. 16(1), pages 7-33, March.
    8. Zhang, Jin & Wang, Lanfang & Wang, Susheng, 2012. "Financial development and economic growth: Recent evidence from China," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 393-412.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Financial development; Economic growth; European monetary union; Panel data analysis; O43; F36; G15; O52;

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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