scholarly journals Relationship between Financial Development and Economic Growth: Empirical Evidence in Indonesia

2018 ◽  
Vol 10 (12) ◽  
pp. 37 ◽  
Author(s):  
Hafnida Hasan
Keyword(s):  
Economic Growth ◽  
Empirical Evidence ◽  
Granger Causality ◽  
Financial Development ◽  
Trade Openness ◽  
Government Expenditure ◽  
Long Run ◽  
Push Forward ◽  
Using Data ◽  
The Relationship

The aim of this paper to examine the relationship between financial development and economic growth in Indonesia by using data from 1986 until 2014. Johansen co-integration and Granger causality are utilized to analyze the data. The financial development is measured by the ratio of broad money and other control variables such as trade openness and government expenditure. The finding indicates that there is long run relationship between financial development and economic growth. Meanwhile, a unidirectional relationship had been found, it come from economic growth to financial development. Therefore, a policy to increase economic growth will push forward in proper to improve financial development in Indonesia.

scholarly journals Financial Development and Economic Growth: Evidence from the Eurozone

2021 ◽  
Vol 4 (1) ◽  
pp. p7
Author(s):  
Pavlos Stamatiou ◽  
Maria Papadopoulou
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Trade Openness ◽  
Panel Analysis ◽  
Cross Sectional ◽  
Analysis Techniques ◽  
Long Run ◽  
Cross Sectional Dependence ◽  
Using Data ◽  
The Relationship

The aim of this paper is to investigate the relationship between financial development and economic growth, within a panel framework that also accounts for trade openness, for the case of Eurozone using data covering the period 1990-2018. We explore this relationship using panel analysis techniques, robust to cross sectional dependence, in order to investigate the presence of causality between the variables. The cointegration results suggested that there is one cointegrated vector between the functions of economic growth, financial development and trade openness. In addition, the causality results of the study revealed, both in the short and long-run, that there is a unidirectional causal relationship between financial development and economic growth with direction from economic growth to financial development, as well as a unidirectional causality running from trade openness to financial development.

The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siphe-okuhle Fakudze ◽  
Asrat Tsegaye ◽  
Kin Sibanda
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

scholarly journals Financial Development and Economic Growth: The Case of Greek Economy

2018 ◽  
Vol 1 (2) ◽  
pp. 173
Author(s):  
Pavlos Stamatiou ◽  
Nikolaos Dritsakis
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Trade Openness ◽  
Cointegration Analysis ◽  
Development Economic ◽  
Causality Tests ◽  
Greek Economy ◽  
Causal Impact ◽  
Using Data

<p><em>This paper examines the relationship among financial development and economic growth, within a framework which also accounts trade openness, for the case of Greece using data covering the period 2001-2017. </em><em>We investigate this relationship using the Johansen and Juselius (1990) cointegration approach and the </em><em>V</em><em>ector </em><em>E</em><em>rror </em><em>C</em><em>orrection </em><em>M</em><em>odels (VECM), employing Granger causality technique, in order to explore the presence of causality among the variables. </em><em>The results of cointegration analysis suggested that there is one cointegrated vector among the functions of financial development, economic growth and trade openness. Granger causality tests have shown that there are unidirectional causalities running from economic growth to financial development as well as from financial development to trade openness. </em><em>The results support that financial development and trade openness do not have causal impact on economic growth in Greece, for the aforementioned period. On the other hand, economic growth has a causal impact on trade both directly and indirectly through financial development.</em><em></em></p>

Do Financial Development, Trade Openness and Political Stability Complement for Egypt’s Economic Growth?

2020 ◽  
pp. 2150001
Author(s):  
Zakaria Yakubu ◽  
Nanthakumar Loganathan ◽  
Narayan Sethi ◽  
Asan Ali Golam Hassan
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Financial Development ◽  
Trade Openness ◽  
Government Expenditure ◽  
Political Stability ◽  
The Political ◽  
Annual Data ◽  
Long Run ◽  
Short Run

This study examines the complement of financial development, trade openness, political stability and integrating government expenditure on Egyptian economy using time series annual data covering the period 1977 until 2018. This study used the ARDL-ECM estimates to determine the long and short-run cointegration between the series. The estimated results indicated that the financial development enhances growth in the long-run, while the political stability undermined the economic growth in the long-run. Interestingly, we found financial development, trade openness and government expenditure Granger cause economic growth in the short-run, while political stability Granger causes economic growth in both short and long-run; and a similar result with the causal relationship appeared in the strong causal relationship condition. Overall, this study showed that both financial development and trade openness gave evidence of causing growth, but the political stability does not. Thus, the reform policies should continue, while adopting measures to ensure that all the determinants are complementing to growth in Egypt as they are all pivotal and it is imperative for policy analysts to put into perspective when formulating policies as the study captures a novel political stability variable towards growth.

Relationships between Financial Development, Trade Openness, and Economic Growth

2015 ◽  
pp. 183-196
Author(s):  
Fahri Seker ◽  
Murat Cetin ◽  
Birol Topcu ◽  
Gamze Yıldız Seren
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Bounds Testing ◽  
Causality Test ◽  
Vector Error Correction ◽  
Long Run ◽  
Short Run

The aim of this chapter is to investigate the cointegration and causal relationship between financial development, trade openness, and economic growth in Turkey for the period of 1980-2012. To analyze the data, the bounds testing and Johansen-Juselius approaches to cointegration and Granger causality test based on vector error-correction model are employed. The cointegration tests suggest that there is a long-run relationship between the variables. The Granger causality test reveals long-run bidirectional causality between trade openness and economic growth. The findings also indicate unidirectional causality running from financial development to trade openness and economic growth in the long run as well as a bi-directional causality between financial development and economic growth in the short run. The results support supply-leading and trade-led growth hypotheses. Therefore, it can be suggested that Turkey can accelerate its economic growth by improving its financial systems and encouraging foreign trade.

scholarly journals INVESTIGATION OF THE RELATIONSHIP BETWEEN TRADE OPENNESS AND ECONOMIC GROWTH IN THE CASE OF CHINA

2017 ◽  
Vol 5 (7) ◽  
pp. 199-213
Author(s):  
Masoud Ali Khalid ◽  
Khalid Hayder A.Ali
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Trade Openness ◽  
Capital Formation ◽  
Sample Period ◽  
Ardl Model ◽  
Long Run ◽  
Causality Tests ◽  
Granger Causality Tests ◽  
The Relationship

In this paper, we have investigated the relationship between trade openness and long-run economic growth over the sample period 1960–2015, utilizing ARDL model. We found evidence that trade openness is directly correlated with economic growth in the long run. Furthermore, Granger Causality tests recommended that a change in trade openness impacts the long-run of economic growth through the interaction with gross capital formation in the case of China.

Electricity consumption and economic growth in ASEAN

2017 ◽  
Vol 5 (2) ◽  
pp. 16
Author(s):  
Ahmad Ghazali Ismail ◽  
Arlinah Abd Rashid ◽  
Azlina Hanif
Keyword(s):  
Economic Growth ◽  
Energy Use ◽  
Electricity Consumption ◽  
Panel Estimation ◽  
Real Gdp ◽  
Long Run ◽  
Bidirectional Relationship ◽  
Short Run ◽  
Using Data ◽  
The Relationship

The relationship and causality direction between electricity consumption and economic growth is an important issue in the fields of energy economics and policies towards energy use. Extensive literatures has discussed the issue, but the array of findings provides anything but consensus on either the existence of relations or direction of causality between the variables. This study extends research in this area by studying the long-run and causal relations between economic growth, electricity consumption, labour and capital based on the neo-classical one sector aggregate production technology mode using data of electricity consumption and real GDP for ASEAN from the year 1983 to 2012. The analysis is conducted using advanced panel estimation approaches and found no causality in the short run while in the long-run, the results indicate that there are bidirectional relationship among variables. This study provides supplementary evidences of relationship between electricity consumption and economic growth in ASEAN.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

scholarly journals Government Expenditure and Economic Growth in South Africa: A Vector Error Correction Modelling and Granger Causality Test

2017 ◽  
Vol 9 (4) ◽  
pp. 164
Author(s):  
Kagiso Molefe ◽  
Ireen Choga
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Error Correction ◽  
Granger Causality ◽  
Time Series Data ◽  
Government Expenditure ◽  
Series Data ◽  
Vector Error Correction ◽  
Vector Error ◽  
The Relationship

Previous studies generally find mixed empirical evidence on the relationship between government spending and economic growth. This study re-examine the relationship between government expenditure and economic growth in South Africa for the period of 1990 to 2015 using the Vector Error Correction Model and Granger Causality techniques. The time series data included in the model were gross domestic Product (GDP), government expenditure, national savings, government debt and consumer price index or inflation. Results obtained from the analysis showed a negative long-run relationship between government expenditure and economic growth in South Africa. Furthermore, the estimate of the speed of adjustment coefficient found in this study has revealed that 49 per cent of the variation in GDP from its equilibrium level is corrected within of a year. Furthermore, the study discovered that the causality relationship run from economic growth to government expenditure. This implied that the Wagner’s law is applicable to South Africa since government expenditure is an effect rather than a cause of economic growth. The results presented in this study are similar to those in the literature and are also sustained by preceding studies.

scholarly journals Dynamic Relationship Between Energy and Economic Growth: Evidence from D8 Countries.

2011 ◽  
Vol 50 (4II) ◽  
pp. 437-458 ◽  
Author(s):  
Sarwat Razzaqi ◽  
Faiz Bilquees ◽  
Saadia . Sherbaz
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Energy Use ◽  
Demand And Supply ◽  
Dynamic Relationship ◽  
Long Run ◽  
Production And Consumption ◽  
Short Run ◽  
Oil Embargo ◽  
The Relationship

Energy sector has a vital influence on an economy, on both demand and supply sides. Therefore, energy production and consumption bear great importance for the developing world. The oil embargo of 1970‘s and its impact on major macroeconomic variables throughout the world attracted many economists to examine the relationship between energy and economic prosperity. The researchers have been unable to establish a definitive direction of causality between the two variables. The purpose of this study is to empirically investigate the dynamic relationship between energy use and economic growth in the D8 countries. The evidence gathered through application of VAR Granger Causality, Johansen Cointegration and VECM proves existence of short-run and long-run correlation between energy use and economic development in all countries. The results supported either uni-directional or bi-directional causality in the D8 countries except for Indonesia in short-run where non-causality was established between the two variables. JEL classifications: C22; Q43. Keywords: Energy Use, Economic Growth, D8, VAR Granger Causality, Cointegration, VECM

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