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The Nexus of Financial Development and Economic Growth Across Developing Economies

The Nexus of Financial Development and Economic Growth Across Developing Economies AbstractThe relationship between financial development and economic growth has been discussed in the literature, but there is no consensus on it. This study aims to examine the relationship between financial development and economic growth in terms of developing countries. The data of 19 developing countries were analyzed individually in an attempt to reveal which of the views explaining the relationship between financial development and economic growth is predominantly valid. In the analysis, the bounds test developed by Pesaran et al. (2001) was used to determine the cointegration relationship, and the Toda Yamamoto causality test (1995) was used to determine the causality relationship. As a result, causality was determined from economic growth to financial development in four countries and from financial development to economic growth in four countries. In 11 countries, no causality was found. The results support the view that no approach is valid for every country. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png South East European Journal of Economics and Business de Gruyter

The Nexus of Financial Development and Economic Growth Across Developing Economies

The Nexus of Financial Development and Economic Growth Across Developing Economies

South East European Journal of Economics and Business , Volume 17 (1): 16 – Jun 1, 2022

Abstract

AbstractThe relationship between financial development and economic growth has been discussed in the literature, but there is no consensus on it. This study aims to examine the relationship between financial development and economic growth in terms of developing countries. The data of 19 developing countries were analyzed individually in an attempt to reveal which of the views explaining the relationship between financial development and economic growth is predominantly valid. In the analysis, the bounds test developed by Pesaran et al. (2001) was used to determine the cointegration relationship, and the Toda Yamamoto causality test (1995) was used to determine the causality relationship. As a result, causality was determined from economic growth to financial development in four countries and from financial development to economic growth in four countries. In 11 countries, no causality was found. The results support the view that no approach is valid for every country.

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Publisher
de Gruyter
Copyright
© 2022 Hasan Aydın Okuyan, published by Sciendo
ISSN
2233-1999
eISSN
2233-1999
DOI
10.2478/jeb-2022-0009
Publisher site
See Article on Publisher Site

Abstract

AbstractThe relationship between financial development and economic growth has been discussed in the literature, but there is no consensus on it. This study aims to examine the relationship between financial development and economic growth in terms of developing countries. The data of 19 developing countries were analyzed individually in an attempt to reveal which of the views explaining the relationship between financial development and economic growth is predominantly valid. In the analysis, the bounds test developed by Pesaran et al. (2001) was used to determine the cointegration relationship, and the Toda Yamamoto causality test (1995) was used to determine the causality relationship. As a result, causality was determined from economic growth to financial development in four countries and from financial development to economic growth in four countries. In 11 countries, no causality was found. The results support the view that no approach is valid for every country.

Journal

South East European Journal of Economics and Businessde Gruyter

Published: Jun 1, 2022

Keywords: Financial development; economic growth; developing countries; Bounds test; Toda Yamamoto causality test; O11; O16; O57

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