AN ANALYSIS OF THE RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: G-7 COUNTRIES

Abigail Stiglingh ()
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Abigail Stiglingh: NORTH-WEST UNIVERSITY

No 9912044, Proceedings of International Academic Conferences from International Institute of Social and Economic Sciences

Abstract: A dire concern for many nations has always been their patterns of economic growth and financial development throughout the years. Tentatively, a relationship between the concepts co-exists. However, the direction of causality is of great interest, particularly in relation to the country?s level of development and growth. This paper studies the existence of a relationship between financial development and economic growth using a sample of G-7 countries for the period of 1996 to 2013. Making use of panel data models such as panel unit root test, Johansen-Fisher cointegration and vector error correction model/granger causality and using secondary time series data obtained from the World Bank and the International Monetary Fund (IMF) for G-7 countries (Canada, France, Germany, Great Britain, Italy, Japan and United States). Variables used include, economic growth, stock market capitalisation, total investment growth, interest rates and population growth. Findings of the study indicated that real interest rates and total investment is positively related to economic growth in G-7; while other variables such as stock market size, do play a significant role in explaining economic growth in G-7 countries. This study may assist G-7 countries to improve their economic growth structure and financial development systems over time.

Keywords: Financial development; economic growth; panel data; developed countries; G-7 (search for similar items in EconPapers)
JEL-codes: A10 C01 E00 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2019-10
New Economics Papers: this item is included in nep-fdg and nep-mac
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Published in Proceedings of the Proceedings of the 52nd International Academic Conference, Barcelona, Oct 2019, pages 493-504

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Persistent link: https://EconPapers.repec.org/RePEc:sek:iacpro:9912044

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