Banking sector development and economic growth developing countries: A bootstrap panel Granger causality analysis

Khalil Mhadhbi (), Chokri Terzi and Ali Bouchrika
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Khalil Mhadhbi: IMM - Institut Marcel Mauss - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique
Ali Bouchrika: IMM - Institut Marcel Mauss - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique

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Abstract: The purpose of this paper is to revisit the Granger causal relationship between banking sector development and economic growth for forty developing countries in the period 1970-2012. In order to capture the different aspects of banking sector development, we develop two banking sector development indices and apply the panel bootstrapped approach to Granger causality testing approach properly taking into account cross-sectional dependence and heterogeneity issues. The empirical results show limited support for the supply-leading, demand-following and complementarity hypotheses. Our results also provide evidence as the causal relationship between banking sector development and economic growth exists in twenty five countries.

Keywords: Economic growth; Banking sector development; Cross-sectional dependency; Slope heterogeneity; Granger causality Bootstrap (search for similar items in EconPapers)
Date: 2017-05-27
New Economics Papers: this item is included in nep-fdg
Note: View the original document on HAL open archive server: https://hal.science/hal-01528104v1
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Citations: View citations in EconPapers (3)

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Journal Article: Banking sector development and economic growth in developing countries: a bootstrap panel Granger causality analysis (2020)
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