Causal link between financial development and economic growth: the case of transition countries
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Author(s) in the Institution
Zamira ÖSKÖNBAYEVA
- Author/s Zamira Oskonbaeva
- URL http://fkd.org.ua/article/view/121844
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Publication type
Article
- Publication year 2018
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Index Type
ESCI (Arşiv)
- DOI 10.18371/fcaptp.v3i26.121844
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Publisher
University of Banking, Ukraine
- Source Financial and credit activity: problems of theory and practice 3, ( 26 ), pp.418-424 -
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Subject Headings
financial development
panel data
economic growth
transition countries
panel Granger causality test
panel cointegration method
pesaran panel unit root test
The financial market is an important element of any market economy. The study of the impact of financial development on the country
The main objective of this study is to investigate the causal relationship between financial development, trade openness and economic growth. The empirical analysis of this study consists on panel data of 9 transition countries (Ukraine, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova and Tajikistan) over the period 1998 to 2015. In order to investigate the causal link between financial development and economic growth a three-stage Panel Granger causality test was employed. Firstly stationarity properties of the series are examined with the help of Pesaran (2007) panel unit root test. Then Westerlund (2007) panel cointegration method is applied. In the final stage Panel Granger causality test is performed.
The results obtained suggest that there is evidence of a bidirectional causality between financial development and economic growth in the short-run. Policy makers in transition countries should consider the impact of financial development on economic growth.
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Collections
Economics and Business
