|
|
|
|
Title: |
Are Financial Deepening and Economic Growth Causally Related? Another
Look at the Evidence |
| Author: |
Darrat, Ali F. |
| Author
Affiliation: |
LA Tech U |
| Source: |
International Economic Journal, Autumn 1999, v. 13, no. 3, pp.19-35 |
|
Publication Date: |
Autumn 1999 |
|
Abstract: |
This study investigates empirically the
role of financial deepening in economic growth in three middle-eastern
countries (Saudi Arabia, Turkey, and the United Arab Emirates). Unlike
many previous studies, I focus on the causal link between the degree of
financial deepening and economic growth in order to discriminate between
several alternative theoretical hypotheses. To that end, I use
multivariate Granger-causality tests within an error-correction
framework. The results generally support the view that financial
deepening is a necessary causal factor of economic growth, although the
strength of the evidence varies across countries and across the proxies
used to measure financial deepening. The causal relationships are also
predominately long-term in nature. Therefore, government policies aimed
at promoting financial deepening in these countries must be persistent
and sustainable in order to foster economic development. |
|
