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Financial development and economic growth in Poland in transition: causality analysis

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  • Gurgul, Henryk
  • Łukasz, Lach

Abstract

The economic literature suggests that the efficient allocation of resources by the financial system speeds up economic development and reduces poverty. However, there are economists who find financial development to be the result of economic growth. This study examines causal relationship between economic growth and financial development in Poland on the basis of quarterly data for the period Q1 2000 – Q4 2009. The empirical research was performed in two variants: bank– and stock market–oriented approaches. The results suggest causality running from the development of the stock market to economic growth and from economic growth to the development of the banking sector. This implies that the direction of causality strongly depends on which particular area of the financial sector is considered. Empirical results were found to be robust both to the type of common variable applied and the specification of testing procedure, which clearly validates major conclusions of this paper.

Suggested Citation

  • Gurgul, Henryk & Łukasz, Lach, 2011. "Financial development and economic growth in Poland in transition: causality analysis," MPRA Paper 38034, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38034
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    Cited by:

    1. Mikhail Stolbov, 2014. "How Are Interbank and Sovereign Debt Markets Linked? Evidence from 14 OECD Countries, the Euro Area and Russia," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(3), pages 331-348, June.
    2. SBIA, Rashid & Shahbaz, Muhammad & Ozturk, Ilhan, 2016. "Economic Growth, Financial Development, Urbanization and Electricity Consumption Nexus in UAE," MPRA Paper 74790, University Library of Munich, Germany, revised 24 Oct 2016.
    3. Saša Obradović & Milka Grbić, 2015. "Causality Relationship between Financial Intermediation by Banks and Economic Growth: Evidence from Serbia," Prague Economic Papers, University of Economics, Prague, vol. 2015(1), pages 60-72.
    4. RNuket Kirci Cevik & Sel Dibooglu & Ali M. Kutan, 2016. "Real and Financial Sector Studies in Central and Eastern Europe: A Review," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 66(1), pages 2-31, February.
    5. Polat, Ali & Shahbaz, Muhammad & Ur Rehman, Ijaz & Satti, Saqlain Latif, 2013. "Revisiting Linkages between Financial Development, Trade Openness and Economic Growth in South Africa: Fresh Evidence from Combined Cointegration Test," MPRA Paper 51724, University Library of Munich, Germany, revised 25 Nov 2013.

    More about this item

    Keywords

    financial development; economic growth; transition economies; Granger causality;

    JEL classification:

    • 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
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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