Financial Development and Economic Growth in the Middle East

Harb, Nasri and Al-Awad, Mouawiya (2005): Financial Development and Economic Growth in the Middle East. Published in: Applied Financial Economics , Vol. 15, No. 15 (2005): pp. 1041-1051.

Abstract

This paper investigates the linkages between financial development and economic growth in the Middle East using newly developed methods of panel cointegration along with the popular time series methodologies such as the Johansen's cointegration, Granger causality, and the variance decompositions. The results indicate that, in the long run financial development and economic growth may be related to some level. In the short run, the panel causality tests point to real economic growth as the force that drives changes in financial development while individual countries' causality tests fail to give a clear evidence of the direction of causations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial Development; Economic Growth; Panel Cointegration
• Subjects: G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation

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