Financial Development and Economic Growth in Sri Lanka

N. Perera () and Ramesh Paudel ()

Applied Econometrics and International Development, 2009, vol. 9, issue 1

Abstract: This study investigates the causal relationship between financial development and economic growth in Sri Lanka over the period 1955 to 2005. After considering the time series characteristics of six measures of financial development, Johansen cointegration and the appropriate Error Correction Model are used to investigate the causal relationship between financial development and economic growth. The findings suggest that broad money causes economic growth with two-way causality. The major finding of this study does not strongly support the view that financial development boosts economic growth.

Keywords: Financial Development; Economic Growth; Sri Lanka; Cointegration test (search for similar items in EconPapers)
JEL-codes: C32 O11 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (18)

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