<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The relationship between financial development and economic growth has been discussed in the literature, but there is no consensus on it. This study aims to examine the relationship between financial development and economic growth in terms of developing countries. The data of 19 developing countries were analyzed individually in an attempt to reveal which of the views explaining the relationship between financial development and economic growth is predominantly valid. In the analysis, the bounds test developed by Pesaran et al. (2001) was used to determine the cointegration relationship, and the Toda Yamamoto causality test (1995) was used to determine the causality relationship. As a result, causality was determined from economic growth to financial development in four countries and from financial development to economic growth in four countries. In 11 countries, no causality was found. The results support the view that no approach is valid for every country.</p>
</abstract>

The relationship between financial development and economic growth has been discussed in the literature, but there is no consensus on it. This study aims to examine the relationship between financial development and economic growth in terms of developing countries. The data of 19 developing countries were analyzed individually in an attempt to reveal which of the views explaining the relationship between financial development and economic growth is predominantly valid. In the analysis, the bounds test developed by Pesaran et al. (2001) was used to determine the cointegration relationship, and the Toda Yamamoto causality test (1995) was used to determine the causality relationship. As a result, causality was determined from economic growth to financial development in four countries and from financial development to economic growth in four countries. In 11 countries, no causality was found. The results support the view that no approach is valid for every country.

The Nexus of Financial Development and Economic Growth Across Developing Economies

Professor, Bandirma Onyedi Eylul University

South East European Journal of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The relationship between financial development and economic growth has been discussed in the literature, but there is no consensus on it. This study aims to...

The Nexus of Financial Development and Economic Growth Across Developing Economies

Published Online: Jun 23, 2022

Page range: 125 - 140

DOI: https://doi.org/10.2478/jeb-2022-0009

Keywords
Financial development, economic growth, developing countries, Bounds test, Toda Yamamoto causality test

© 2022 Hasan Aydın Okuyan, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The Nexus of Financial Development and Economic Growth Across Developing Economies

Published Online: Jun 23, 2022

Page range: 125 - 140

DOI: https://doi.org/10.2478/jeb-2022-0009

KeywordsFinancial development, economic growth, developing countries, Bounds test, Toda Yamamoto causality test

© 2022 Hasan Aydın Okuyan, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
Financial development, economic growth, developing countries, Bounds test, Toda Yamamoto causality test