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Financial Markets and Economic Growth in Greece

Author

Listed:
  • George Hondroyiannis

    (Bank of Greece, Economic Research Department)

  • Sarantis Lolos

    (Department of Economics and Regional Development,Panteion University)

  • Evangelia Papapetrou

    (Bank of Greece, Economic Research Department and University of Athens, Department of Economics)

Abstract

This paper assesses empirically the relationship between the development of the banking system and the stock market and economic performance for the case of Greece over the period 1986-1999. Greece is a medium sized EU country where the financial liberalization process started back in the early eighties. The empirical results, using VAR models, suggest that there exists a bi-directional causality between finance and growth in the long run. The findings, using error-correction models, show that both bank and stock market financing can promote economic growth, in the long run, although their effect is small. Furthermore, the contribution of stock market finance to economic growth appears to be substantially smaller compared to bank finance.

Suggested Citation

  • George Hondroyiannis & Sarantis Lolos & Evangelia Papapetrou, 2004. "Financial Markets and Economic Growth in Greece," Working Papers 17, Bank of Greece.
    • Handle: RePEc:bog:wpaper:17
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    9. Candauda Arachchige Saliya, 2022. "Stock market development and nexus of market liquidity: The case of Fiji," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4364-4382, October.

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    More about this item

    Keywords

    Financial Development; Economic Growth; VAR;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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