Access the full text.
Sign up today, get DeepDyve free for 14 days.
Najeb Masoud, Glenn Hardaker (2012)
The impact of financial development on economic growth: Empirical analysis of emerging market countriesStudies in Economics and Finance, 29
R. Pradhan, Mak Arvin, N. Norman, Y. Nishigaki (2014)
Does banking sector development affect economic growth and inflation? A panel cointegration and causality approachApplied Financial Economics, 24
Journal of Financial Economics, 58
Joerg Breitung, Samarjit Das (2005)
Panel unit root tests under cross‐sectional dependenceStatistica Neerlandica, 59
P. Arestis, Panicos Demetriades, K. Luintel (2001)
Financial Development and Economic Growth: The Role of Stock MarketsJournal of Money, Credit and Banking, 33
M. Kandil, M. Shahbaz, M. Mahalik, D. Nguyen (2017)
The drivers of economic growth in China and India: globalization or financial development?International Journal of Development Issues, 16
S. Nyasha, N. Odhiambo (2015)
Economic growth and market-based financial systems: a reviewStudies in Economics and Finance, 32
International Journal of Economic Perspectives, 10
P. Naik, Puja Padhi (2015)
Stock Market Volatility and Equity Trading Volume: Empirical Examination from Brazil, Russia, India and China (BRIC)Global Business Review, 16
P. Pedroni (1999)
Approximate Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors
Luca Deidda, B. Fattouh (2002)
Non-linearity between finance and growthEconomics Letters, 74
Felix Rioja, N. Valev (2003)
Finance and the Sources of Growth at Various Stages of Economic DevelopmentFEN: Other International Corporate Finance (Topic)
R. Banya, N. Biekpe (2017)
Bank competition and economic growth: Empirical evidence from selected frontier African countriesJournal of Economic Studies, 44
J. Arcand, Enrico Berkes, U. Panizza (2012)
Too much finance?Journal of Economic Growth, 20
C. Kao (1996)
Spurious Regression and Residual-Based Tests for Cointegration in Panel Data When the Cross-Section and Time-Series Dimensions are ComparableEconometrics
O. Ergungor (2008)
Financial system structure and economic growth: Structure mattersInternational Review of Economics & Finance, 17
Shun-Jen Hsueh, Yu-Hau Hu, Chien-heng Tu (2013)
Economic growth and financial development in Asian countries: A bootstrap panel Granger causality analysisEconomic Modelling, 32
T. Beck, R. Levine, Norman Loayza (1999)
Finance and the Sources of GrowthDevelopment Economics
Nauro Campos, Nauro Campos, M. Karanasos, Bin Tan (2012)
Two to Tangle: Financial Development, Political Instability and Economic Growth in Argentina (1896-2000)Journal of Banking and Finance, 36
American Economic Review, 88
P. Sarkar (2007)
Stock market development, capital accumulation and growth in India since 1950
Taha Chaiechi (2012)
Financial development shocks and contemporaneous feedback effect on key macroeconomic indicators: A post Keynesian time series analysisEconomic Modelling, 29
W. Jung (1986)
Financial Development and Economic Growth: International EvidenceEconomic Development and Cultural Change, 34
Claudia Heller, D. Champernowne, B. Reddaway, R. Harrod, James Meade (2007)
Hicks, the General Theory and the generalization of the General Theory
Journal of Applied Corporate Finance, 11
K. Im, M. Pesaran, Y. Shin (2003)
Testing for unit roots in heterogeneous panelsJournal of Econometrics, 115
H. Zang, Y. Kim (2007)
Does financial development precede growth? Robinson and Lucas might be rightApplied Economics Letters, 14
Andrew Levin, C. Lin, C. Chu (2002)
Unit root tests in panel data: asymptotic and finite-sample propertiesJournal of Econometrics, 108
Antonio Bojanic (2012)
The Impact of Financial Development and Trade on the Economic Growth of BoliviaJournal of Applied Economics, 15
N. Apergis, Ioannis Filippidis, C. Economidou (2007)
Financial Deepening and Economic Growth Linkages: A Panel Data AnalysisReview of World Economics, 143
P. Bhattacharya, M. Sivasubramanian (2003)
Financial development and economic growth in India: 1970–1971 to 1998–1999Applied Financial Economics, 13
J. Gregorio, P. Guidotti (1992)
Financial Development and Economic GrowthWorld Development, 23
Su-Yin Cheng (2012)
Substitution or complementary effects between banking and stock markets: Evidence from financial openness in TaiwanJournal of International Financial Markets, Institutions and Money, 22
Journal of Development Economics, 74
N. Laopodis, A. Papastamou (2016)
Dynamic interactions between stock markets and the real economy: Evidence from emerging marketsInternational Journal of Emerging Markets, 11
R. Rajan, Luigi Zingales (1998)
Which Capitalism? Lessons from the East Asian CrisisFinancial Crises eJournal
T. Chang (2002)
Financial development and economic growth in Mainland China: a note on testing demand-following or supply-leading hypothesisApplied Economics Letters, 9
Journal of Banking and Finance, 33
Savings and Development, 23
G. Vardar, Yener Coskun (2016)
Exploring the Finance-Growth Volatility Nexus: Evidence from Developed, Developing and Transition CountriesPolitical Economy - Development: Domestic Development Strategies eJournal
C. Calderón, Lin Liu (2003)
The Direction of Causality Between Financial Development and Economic GrowthJournal of Development Economics, 72
J. Gurley, E. Shaw (1967)
Financial Structure and Economic DevelopmentEconomic Development and Cultural Change, 15
R. Atje, Boyan Jovanovic (1993)
Stock markets and developmentEuropean Economic Review, 37
Sami Naceur, S. Ghazouani (2005)
Stock Markets, Banks, and Economic Growth: Empirical Evidence from the MENA RegionCapital Markets: Market Microstructure
Robert King (1993)
Finance and Growth: Schumpeter Might Be RightQuarterly Journal of Economics, 108
Jyh‐Lin Wu, Han Hou, Su-Yin Cheng (2010)
The dynamic impacts of financial institutions on economic growth: Evidence from the European UnionJournal of Macroeconomics, 32
H. Patrick (1966)
Financial Development and Economic Growth in Underdeveloped CountriesEconomic Development and Cultural Change, 14
International Research Journal of Finance and Economics, 21
Hiro Toda, Taku Yamamoto (1995)
Statistical inference in vector autoregressions with possibly integrated processesJournal of Econometrics, 66
P. Wachtel, I. Hasan, Mingming Zhou (2006)
Institutional Development, Financial Deepening and Economic Growth: Evidence from ChinaMonetary Economics
Panicos Demetriades, Khaled Hussein (1996)
Does financial development cause economic growth? Time-series evidence from 16 countriesJournal of Development Economics, 51
Chung-Hua Shen, Chien‐Chiang Lee (2006)
Same Financial Development yet Different Economic Growth--Why?Journal of Money, Credit, and Banking, 38
Research in International Business and Finance, 21
Indranil Chakraborty (2008)
Does Financial Development Cause Economic Growth? The Case of IndiaSouth Asia Economic Journal, 9
R. King, R. Levine (1993)
Finance, entrepreneurship and growthJournal of Monetary Economics, 32
Madhu Sehrawat, Giri A.K. (2016)
The impact of financial development on economic growthInternational Journal of Emerging Markets, 11
Kojo Menyah, Ş. Nazlıoğlu, Y. Wolde‐Rufael (2014)
Financial development, trade openness and economic growth in African countries: New insights from a panel causality approachEconomic Modelling, 37
Ho-Chuan Huang, S. Lin (2009)
Non-Linear Finance–Growth Nexus: A Threshold with Instrumental Variable ApproachWiley-Blackwell: Economics of Transition
R. Levine, Norman Loayza, T. Beck (1999)
Financial Intermediation and Growth: Causality and CausesFEN: Financial Development & Governance (Topic)
Hassan Hamadi, Charbel Bassil (2015)
Financial Development and Economic Growth in the MENA RegionComparative Economic Studies, 57
Journal of Banking and Finance, 28
Oxford Bulletin of Economics and Statistics, 61
R. Agrawalla, S. Tuteja (2008)
Share Prices and Macroeconomic Variables in India: An Approach to Investigate the Relationship Between Stock Markets and Economic GrowthJournal of Management and Research, 8
P. Rousseau, P. Wachtel (2000)
Equity Markets and Growth: Cross-Country Evidence on Timing and Outcomes, 1980-1995Journal of Banking and Finance, 24
A. Phiri (2015)
Asymmetric cointegration and causality effects between financial development and economic growth in South AfricaStudies in Economics and Finance, 32
Economic Inquiry, 42
Ibrahim Bazazo, E. Alshatnawi, R. Qaddhat, I. Alomari (2016)
The Effect of Information Technology in Creative Marketing "Case Study- Jordan Tourism Board"Journal of Management and Research, 8
P. Pedroni (2004)
PANEL COINTEGRATION: ASYMPTOTIC AND FINITE SAMPLE PROPERTIES OF POOLED TIME SERIES TESTS WITH AN APPLICATION TO THE PPP HYPOTHESISEconometric Theory, 20
R. Levine, S. Zervos (1996)
Stock Markets, Banks, and Economic GrowthDevelopment Economics
Felix Rioja, N. Valev (2004)
Does One Size Fit All?: A Reexamination of the Finance and Growth RelationshipInternational Corporate Finance eJournal
A. Demirguc-Kunt, Vojislav Maksimovic (1996)
Stock Market Development and Financing Choices of FirmsThe World Bank Economic Review, 10
S. Law, Nirvikar Singh (2013)
Does Too Much Finance Harm Economic Growth?PSN: Economic Growth (Topic)
S. Kaushal, Amlan Ghosh (2018)
Banking, insurance and economic growth in India: An empirical analysis of relationship from regulated to liberalized eraJournal of Financial Economic Policy, 10
Madhu Sehrawat, A. Giri (2015)
Financial development and economic growth: empirical evidence from IndiaStudies in Economics and Finance, 32
R. Lucas (1988)
On the Mechanics of Economic Development
G. Filis, C. Leon (2008)
Cyclical fluctuations and transmission mechanisms of the GDP, investments and the stock exchange in Greece evidence from spectral and VAR analysis
The purpose of this paper is to examine the causal relationship between economic development and financial sector development for 28 countries at different stages of their development. The authors specifically focus on the nature of causality during economic boom and tranquil cycles.Design/methodology/approachThe study uses quarterly time series panels of 17 developed and 11 emerging countries, during 1993Q1-2014Q4 with each having three sub-panels – full sample, a period of the economic uptrend (UP), and period of the economic downtrend. The authors use a univariate analysis for initial screening followed by panel unit root test, panel co-integration and causality test proposed by Toda–Yamamoto to examine the causal relationship.FindingsThe principal results suggest that for developed economies, there is a causal flow from financial sector to real sector in line with the “supply-leading” hypothesis, whereas for emerging economies, it is from real sector to financial sector, in line with the “demand-following” hypothesis. This overall relationship is strong for both emerging and developed economies during economic boom or UP cycles, but becomes weak during economic downturns or tranquil periods.Originality/valueThis study is different from previous studies on this issue and contributes to the existing literature in a number of ways. First, the focus of this paper revolves around identification of differential patterns in causal flows between real and financial sectors for different economies, across different economic cycles. Second, to present a robust representation of financial sector, the authors consider both banking sector and stock market parameters as the proxy for financial sector development. Third, the authors address the “stock-flow problem” in the measurement of financial variables a typical criticism of some of the previous studies. Finally, the authors use a rich sample size comprising of about 2,500 quarterly observations for each variable, with about 1,500 observations from developed and 1,000 from emerging economies.
Studies in Economics and Finance – Emerald Publishing
Published: Aug 8, 2019
Keywords: Economic development; Panel co-integration; Stock market; Banking sector development; Toda and Yamamoto causality test
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.