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on Financial Development and Growth |
| By: | abu-bader, suleiman; abu-qarn, aamer |
| Abstract: | This paper examines the causal relationship between financial development and economic growth in five Middle Eastern and North African (MENA) countries for different periods ranging from 1960 to 2004, within a trivariate vector autoregressive (VAR) framework. We employ four different measures of financial development and apply Granger causality tests using the cointegration and vector error-correction (VEC) methodology. Our empirical results show weak support for a long-run relationship between financial development and economic growth, and for the hypothesis that finance leads growth. In cases where cointegration was detected, Granger causality was either bidirectional or it ran from output to financial development. |
| Keywords: | Financial development; Economic growth; MENA; Granger causality; Error-correction models; Cointegration |
| JEL: | G28 O16 G18 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:972&r=fdg |
| By: | Suleiman Abu-Bader (Department of Economics, Ben-Gurion University of the Negev); Aamer Abu-Qarn (Department of Economics, Ben-Gurion University of the Negev) |
| Abstract: | This paper examines the causal relationship between financial development and economic growth in Egypt during the period 1960-2001 within a trivariate VAR setting. We employ four different measures of financial development and apply Granger causality tests using the cointegration and vector error correction methodology. Our results significantly support the view that financial development Granger-causes economic growth either through increasing investment efficiency or through increasing resources for investment. This finding suggests that the financial reforms launched in 1990 can explain the rebound in economic performance since then and that further deepening of the financial sector is an important instrument to stimulate saving/investment and therefore long-term economic growth. |
| Keywords: | Financial development, Economic growth, Egypt, Granger causality, Error-correction models, Cointegration |
| JEL: | O16 G18 G28 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:bgu:wpaper:206&r=fdg |
| By: | Feridun, Mete |
| Abstract: | This study examines the relationship between economic growth as measured by GDP per capita and foreign direct investment for Singapore, using the methodology of Granger causality and vector auto regression (VAR). Evidence shows that there is a unidirectional Granger causation from foreign direct investment to economic growth. |
| Keywords: | Granger causality; vector auto regression; economic growth. |
| JEL: | C01 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1054&r=fdg |
| By: | Mohey-ud-din, Ghulam |
| Abstract: | The Two-Gap Model suggests that the Poor countries have to rely on the foreign capital inflows (FCI) to fill the two Gaps: Import-Export Gap and the Savings-Investment Gap. There are many forms of the foreign capital inflows like FDI (Foreign Direct Investment), External loans & Credit, technical assistance, Project & non-project aid etc. So, UDC’s (including Pakistan) have to rely on the Foreign aid, Debt FDI and portfolio investments. The role of these external resources (FCI) always remains questionable. This paper analyzes the impact of the foreign capital inflow on GDP Growth in Pakistan during 1975-2004. |
| Keywords: | Foreign capital inflows (FCI); Foreign Investment; Economic Growth; Foreign Economic Assistance; Official Development Assistance (ODA); Foreign Direct Investment (FDI). Foreign Debt Burden; Aid and Growth; FCI Effectiveness. |
| JEL: | O19 O11 O1 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:1233&r=fdg |