Financial development and economic growth: A panel causality analysis for OECD countries

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dc.contributor.authorAğazade, Seymur
dc.contributor.authorKarakaya, Aykut
dc.date.accessioned2021-02-19T21:16:23Z
dc.date.available2021-02-19T21:16:23Z
dc.date.issued2019
dc.departmentALKÜ
dc.description.abstractThe relationship between financial development and economic growth is expressed by different hypotheses. Demand pressure which is caused by increased income as a conclusion of growth may lead to the financial development. This argument is known as demand-following hypothesis. On the contrary, the supply-leading hypothesis indicates that financial development leads to increased efficiency and therefore promotes growth. The feedback hypothesis implies that the causal relationship between financial development and growth is bidirectional, whereas there is no causality in the neutral hypothesis. This study examines the relationship between financial development and economic growth in the case of 34 OECD countries. For this purpose we estimate heterogeneous VAR model and conduct Dumitrescu and Hurlin (2012) causality test which allows for dependency in panel units and heterogeneity of parameters. Findings of causality test showed that there is a bidirectional relationship. In VAR model that estimated for growth, parameters of lagged financial development were found to be significant for 11 countries. In financial development VAR model, lagged growth variable coefficients of 17 countries were significant. These findings support the feedback hypothesis for OECD countries in financial development and economic growth relationship.
dc.identifier.doi10.30798/makuiibf.526723
dc.identifier.endpage484en_US
dc.identifier.issn2149-1658
dc.identifier.issue2en_US
dc.identifier.startpage471en_US
dc.identifier.urihttps://doi.org/10.30798/makuiibf.526723
dc.identifier.urihttps://hdl.handle.net/20.500.12868/404
dc.identifier.volume6en_US
dc.identifier.wosWOS:000484349900014
dc.identifier.wosqualityN/A
dc.indekslendigikaynakWeb of Science
dc.institutionauthor0-belirlenecek
dc.language.isotr
dc.publisherMehmet Akif Ersoy Univ
dc.relation.ispartofJournal of Mehmet Akif Ersoy University Economics And Administrative Sciences Faculty
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanı
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectFinancial Development
dc.subjectGrowth
dc.subjectPanel Causality Tests
dc.subjectOECD Countries
dc.titleFinancial development and economic growth: A panel causality analysis for OECD countries
dc.typeArticle

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