Stock Markets, Banks and Long Run Economic Growth: A Panel Cointegration-Based Analysis

Laurent Cavenaile, Christian Gengenbach () and Franz Palm

De Economist, 2014, vol. 162, issue 1, 19-40

Abstract: The aim of this paper is to investigate the long run relationship between the development of banks and stock markets and economic growth. We make use of a Johansen-based panel cointegration methodology allowing for cross-country dependence to test the number of cointegrating vectors among these three variables for 5 developing countries. In addition, we test the direction of potential causality between financial and economic development. Our results conclude to the existence of a single cointegrating vector between financial development and growth and of causality going from financial development to economic growth. We find little evidence of reverse causation as well as bi-directional causality. We interpret this as evidence supporting the significance of financial development for economic development although banks and stock markets may have different effects depending on the level of economic development. Copyright Springer Science+Business Media New York 2014

Keywords: Banks; Stock markets; Economic growth; Panel cointegration; Causality; E44; G20; O43 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10645-013-9220-6 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Stock Markets, Banks and Long Run Economics Growth: A Panel Cointegration-Based Analysis (2013)
Working Paper: Stock Markets, Banks and Long Run Economic Growth: A Panel Cointegration-Based Analysis (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:decono:v:162:y:2014:i:1:p:19-40

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10645/PS2

DOI: 10.1007/s10645-013-9220-6

Access Statistics for this article

De Economist is currently edited by Rob Alessie, Bas ter Weel, Casper van Ewijk, Jan C. van Ours and Frank de Jong

More articles in De Economist from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().