Financial Development and Economic Growth: An Empirical Investigation of three European Union Member - Countries

Antonios Adamopoulos

International Journal of Finance, Insurance and Risk Management, 2020, vol. 10, issue 1, 3-24

Abstract: Purpose: This paper investigates the relationship between financial development and economic growth for three European Union member countries, Greece, Ireland and UK. Design/Methodology/Approach: For this reason the existence of the long-run relationship between these variables applying the cointegration analysis is examined as suggested by Johansen and Juselious. Findings: Granger causality tests based on a vector error correction model (VECM) indicated that there is a causal relationship between financial development and economic growth in the three European Union’s member countries. Practical Implications: The Vector Error Correction specification forces the long-run behaviour of the endogenous variables to converge to their cointegrating relationships, while accommodates the short-run dynamics. Originality/Value: The study offers an in-depth insight into econometric modelling of economic growth.

Keywords: Financial Development; Economic Growth; Cointegration; Granger Causality. (search for similar items in EconPapers)
JEL-codes: C22 O11 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijfirm:v:10:y:2020:i:1:p:3-24

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