The Influence of Bank Loans and Deposits on Ecuador’s Economic Growth: A Cointegration Analysis

Freddy Naula (), Cristian Zamora and Kevin Gomez
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Freddy Naula: Facultad de Ciencias Económicas y Administrativas, Universidad de Cuenca, Cuenca 010203, Ecuador
Cristian Zamora: Facultad de Ciencias Químicas, Universidad de Cuenca, Cuenca 010203, Ecuador
Kevin Gomez: Facultad de Ciencias Económicas y Administrativas, Universidad de Cuenca, Cuenca 010203, Ecuador

IJFS, 2025, vol. 13, issue 2, 1-17

Abstract: This study examines the relationship between banking sector development (credit and deposits) and economic growth in Ecuador, using quarterly data for the period 2000–2022. An ARDL approach with Bound Test cointegration is employed, incorporating structural breaks using the Bai–Perron test and controlling for macroeconomic shocks. In addition, time transformation methodologies are applied to harmonize the frequency of the series: the monthlyization of GDP is performed using the Chow-Lin method, and the imputation of missing unemployment data using the Kalman filter. The results reveal a significant long-run elasticity between bank deposits and GDP (0.45%), while credits do not present a statistically significant effect, possibly due to high delinquency and institutional weakness. Granger causality tests confirm a unidirectional relationship between banking variables to economic growth. These findings highlight the importance of strengthening financial supervision and improving institutional quality to enhance the effect of bank intermediation. The study provides robust and contextualized empirical evidence relevant to resource-dependent economies with concentrated financial systems, contributing to the debate on the relationship between finance and growth in developing countries.

Keywords: banking development; economic growth; lending; deposits (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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