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Does banking sector development affect economic growth and inflation? A panel cointegration and causality approach

Author

Listed:
  • Rudra P. Pradhan
  • B. Mak Arvin
  • Neville R. Norman
  • Yasuyuki Nishigaki

Abstract

Many studies investigate relationships between economic growth in specific economies and the development of its banking sector or between its growth rate and its rate of inflation. Advancing on earlier work, this article uses panel cointegration and causality tests applied to 34 OECD countries over the period 1960--2011. Our novel panel-data estimation procedure offers more robust estimates by utilizing variations between countries as well as variation over time. We identify important long-run causal links among the variables and show their implications for economic policy.

Suggested Citation

  • Rudra P. Pradhan & B. Mak Arvin & Neville R. Norman & Yasuyuki Nishigaki, 2014. "Does banking sector development affect economic growth and inflation? A panel cointegration and causality approach," Applied Financial Economics, Taylor & Francis Journals, vol. 24(7), pages 465-480, April.
  • Handle: RePEc:taf:apfiec:v:24:y:2014:i:7:p:465-480
    DOI: 10.1080/09603107.2014.881968
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    References listed on IDEAS

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    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
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    Cited by:

    1. Pradhan, Rudra P. & Arvin, Mak B. & Norman, Neville R., 2015. "Insurance development and the finance-growth nexus: Evidence from 34 OECD countries," Journal of Multinational Financial Management, Elsevier, vol. 31(C), pages 1-22.
    2. repec:eee:ecosys:v:42:y:2018:i:4:p:637-648 is not listed on IDEAS
    3. Magda Kandil & Muhammad Shahbaz & Mantu Kumar Mahalik & Duc Khuong Nguyen, 2017. "The drivers of economic growth in China and India: globalization or financial development?," International Journal of Development Issues, Emerald Group Publishing, vol. 16(1), pages 54-84, April.
    4. repec:eee:revfin:v:33:y:2017:i:c:p:12-28 is not listed on IDEAS
    5. repec:eee:quaeco:v:66:y:2017:i:c:p:136-148 is not listed on IDEAS
    6. Pradhan, Rudra P. & Arvin, Mak B. & Hall, John H. & Bahmani, Sahar, 2014. "Causal nexus between economic growth, banking sector development, stock market development, and other macroeconomic variables: The case of ASEAN countries," Review of Financial Economics, Elsevier, vol. 23(4), pages 155-173.
    7. Rudra P. Pradhan & Mak B. Arvin & Neville R. Norman & Sara E. Bennett, 2016. "Financial depth, internet penetration rates and economic growth: country-panel evidence," Applied Economics, Taylor & Francis Journals, vol. 48(4), pages 331-343, January.
    8. Rudra P. Pradhan & Mak B. Arvin & Sara E. Bennett & Mahendhiran Nair & John H. Hall, 2016. "Bond Market Development, Economic Growth and Other Macroeconomic Determinants: Panel VAR Evidence," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 23(2), pages 175-201, June.
    9. Balcilar, Mehmet & Gupta, Rangan & Lee, Chien-Chiang & Olasehinde-Williams, Godwin, 2018. "The synergistic effect of insurance and banking sector activities on economic growth in Africa," Economic Systems, Elsevier, vol. 42(4), pages 637-648.
    10. repec:jed:journl:v:42:y:2017:i:4:p:23-57 is not listed on IDEAS
    11. repec:eee:jebusi:v:96:y:2018:i:c:p:15-41 is not listed on IDEAS

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