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Further Evidence on Finance-Growth Causality: A Panel Data Analysis

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  • Chrysost BANGAKE
  • Comlanvi Jude EGGOH

Abstract

This paper reassesses the causal relationship between financial development and economic growth. Using recently developed panel methods on a data set of 71 developed and developing countries over the period 1960-2004, our study confirms previous results of a bidirectional causality between finance and growth. In addition, we show significant differences among country groups when considering both long-run and short-run causality. While in low and middle income countries there is no supportive evidence of short-run causality between financial development and economic growth, in high income countries economic growth significantly affects financial development.
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Suggested Citation

  • Chrysost BANGAKE & Comlanvi Jude EGGOH, 2010. "Further Evidence on Finance-Growth Causality: A Panel Data Analysis," LEO Working Papers / DR LEO 671, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    • Handle: RePEc:leo:wpaper:671
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