2.4 Relationship between Financial Development and Economic Growth Financial growth is the change in the financial system regarding size and structure. Nonetheless, financial deepening expresses the share of the money supply of national income, and it becomes a standard of economic development and financial instrument variety (Saltoglu, 1998). Mercan and Gocer (2012) work on the panel data analysis using the annual data for the period from 1989 to 2010. They establish that the impact of financial development on economic growth was positive and statistically significant. Proof that even foreign direct investments and openness provided to the growth positively was also set up.
King and Levine (1993) survey of 80 countries over the period of …show more content…
They select a group of developing and developed countries using a cross-country data averaged over the period 2001 to 2005. The results show significantly positive for a full sample of 98 developing and developed countries. However, a sample of 64 developing countries records also positive and highly significant. Thus, a sample of 26 developed countries show the effect of financial sector’s development is significantly positive but the impact of financial sector’s efficiency is positive but statistically …show more content…
(2011) study of MENA Countries (1980-2007) using a panel Granger causality test. They understand that it is unacceptable to create an absolute statement about the causality between financial development and economic development. Hassan, Sanchez Yu (2011) research on 168 countries that classified according to income level. They use a panel data analysis and show a positive relationship between financial development and economic development in developing nations. For many country samples, a two-sided causality obtained in the short term. Ince (2011) investigates on Turkey sample between 1980 and 2010, using method cointegration analysis Granger causality analysis. They establish that although there is a substantial relationship between economic development and financial growth in the short term, there is no connection in the long run.
Khadraoui and Smida (2012) research on the different econometric approaches used in panel data in the relation of financial sector development and growth. They use a panel data of 70 countries for the period between 1970 and 2009. They are using both LS (fixed effect) and GMM-Difference and GMM-System estimators for dynamic panel data. They find a positive correlation between indicators of financial development and economic
King and Levine (1993) survey of 80 countries over the period of …show more content…
They select a group of developing and developed countries using a cross-country data averaged over the period 2001 to 2005. The results show significantly positive for a full sample of 98 developing and developed countries. However, a sample of 64 developing countries records also positive and highly significant. Thus, a sample of 26 developed countries show the effect of financial sector’s development is significantly positive but the impact of financial sector’s efficiency is positive but statistically …show more content…
(2011) study of MENA Countries (1980-2007) using a panel Granger causality test. They understand that it is unacceptable to create an absolute statement about the causality between financial development and economic development. Hassan, Sanchez Yu (2011) research on 168 countries that classified according to income level. They use a panel data analysis and show a positive relationship between financial development and economic development in developing nations. For many country samples, a two-sided causality obtained in the short term. Ince (2011) investigates on Turkey sample between 1980 and 2010, using method cointegration analysis Granger causality analysis. They establish that although there is a substantial relationship between economic development and financial growth in the short term, there is no connection in the long run.
Khadraoui and Smida (2012) research on the different econometric approaches used in panel data in the relation of financial sector development and growth. They use a panel data of 70 countries for the period between 1970 and 2009. They are using both LS (fixed effect) and GMM-Difference and GMM-System estimators for dynamic panel data. They find a positive correlation between indicators of financial development and economic