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Causal relation between economic growth and domestic credit in the economic globalization: Evidence from the Hatemi-J's test

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  • Giray Gozgor

Abstract

This paper empirically examines causality relationship between economic growth and domestic credit in the economic globalization in 58 developed and developing countries over the period 1970-2010. We use the asymmetric Granger causality test that is based on modified Wald test statistics within bootstrapped critical values. We find a significant causality from domestic credit to economic growth only in seven developing countries. Furthermore, there is a unidirectional causality from economic growth to domestic credit in five developed and 10 developing economies.

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  • Giray Gozgor, 2015. "Causal relation between economic growth and domestic credit in the economic globalization: Evidence from the Hatemi-J's test," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(3), pages 395-408, April.
    • Handle: RePEc:taf:jitecd:v:24:y:2015:i:3:p:395-408
    DOI: 10.1080/09638199.2014.908325
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    References listed on IDEAS

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    1. Jesús Fernández-Villaverde & Luis Garicano & Tano Santos, 2013. "Political Credit Cycles: The Case of the Eurozone," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 145-166, Summer.
    2. Kalina Manova, 2013. "Credit Constraints, Heterogeneous Firms, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 711-744.
    3. A. Hatemi-J, 2003. "A new method to choose optimal lag order in stable and unstable VAR models," Applied Economics Letters, Taylor & Francis Journals, vol. 10(3), pages 135-137.
    4. Tarlok Singh, 2010. "Does International Trade Cause Economic Growth? A Survey," The World Economy, Wiley Blackwell, vol. 33(11), pages 1517-1564, November.
    5. Abdulnasser Hatemi-J, 2012. "Asymmetric causality tests with an application," Empirical Economics, Springer, vol. 43(1), pages 447-456, August.
    6. Philip R. Lane, 2013. "Credit Dynamics and Financial Globalisation," National Institute Economic Review, National Institute of Economic and Social Research, vol. 225(1), pages 14-22, August.
    7. Robert Kelly & Kieran Mcquinn & Rebecca Stuart, 2011. "Exploring the Steady-State Relationship Between Credit and GDP for a Small Open Economy–The Case Of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 42(4), pages 455-477.
    8. Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
    9. Gozgor, Giray, 2014. "Determinants of domestic credit levels in emerging markets: The role of external factors," Emerging Markets Review, Elsevier, vol. 18(C), pages 1-18.
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    Cited by:

    1. repec:zbw:bofitp:2015_015 is not listed on IDEAS
    2. Mikhail Stolbov, 2017. "Causality between credit depth and economic growth: evidence from 24 OECD countries," Empirical Economics, Springer, vol. 53(2), pages 493-524, September.
    3. repec:zbw:bofitp:urn:nbn:fi:bof-201505061169 is not listed on IDEAS
    4. Sadaf MAJEED* & Syed Faizan IFTIKHAR** & Zeeshan ATIQ***, 2019. "CREDIT ACTIVITY AND GROWTH PERFORMANCE: Evidence from Panel Data," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 29(1), pages 107-129.
    5. Abdulnasser Hatemi-J, 2020. "Bear Markets and Recessions versus Bull Markets and Expansions," Papers 2009.01343, arXiv.org, revised Nov 2020.
    6. Kizito Uyi Ehigiamusoe & Hooi Hooi Lean, 2018. "Tripartite Analysis of Financial Development, Trade Openness and Economic Growth: Evidence from Ghana, Nigeria and South Africa," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 12(2), June.
    7. Ehigiamusoe, Kizito Uyi & Vinitha Guptan & Narayanan, Suresh, 2019. "The effects of income and inflation on financial development: Evidence from heterogeneous panels," Economics Discussion Papers 2019-11, Kiel Institute for the World Economy (IfW Kiel).
    8. Mikhail Stolbov, 2017. "Causality between credit depth and economic growth: evidence from 24 OECD countries," Empirical Economics, Springer, vol. 53(2), pages 493-524, September.
    9. Jelson Serafim, 2021. "Financial deepening, Stock market, Inequality and Poverty: Some African Evidence," Working Papers REM 2021/0177, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    10. Svetlana S. Morkovina & Alexandr S. Natsubidze & Margarita S. Irizepova & Nikolai G. Sinyavsky & Vladimir V. Chashchin, 2016. "Transnational Business as a Manifestation of the Integration of the Global Economy and a Driving Force of its Development," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 10(4), December.
    11. Aušrinė Lakštutienė & Aida Barkauskaitė, 2016. "Evaluation of relationship between banks lending activities and the economies in Baltic countries," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 5(1), pages 141-156.
    12. repec:bof:bofitp:urn:nbn:fi:bof-201505061169 is not listed on IDEAS

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