Bank credits and non-oil economic growth: Evidence from Azerbaijan

Fakhri Hasanov () and Fariz Huseynov

International Review of Economics & Finance, 2013, vol. 27, issue C, 597-610

Abstract: We examine the impact of bank credits on non-oil tradable sector output using aggregate data from Azerbaijan. We apply ARDL Bounds Testing approach, Engle–Granger two-step methodology, and Johansen's approach while correcting for small sample bias to test for cointegration and construct error correction models. Results from all three approaches are similar indicating that bank credits have a positive impact on non-oil tradable sectors output both in the long- and short-run. Short-run deviations are corrected to the long-run equilibrium within one quarter. Our results are useful for the macroeconomic policy makers and contribute to the literature that studies the relationship between the financial sector development and economic growth in the resource driven small open transition economies.

Keywords: Non-oil economy; Cointegration; Bounds testing approach; Financial development; Azerbaijan (search for similar items in EconPapers)
JEL-codes: E44 G21 O16 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:27:y:2013:i:c:p:597-610

DOI: 10.1016/j.iref.2013.02.005

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