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

Laurent Cavenaile, Christian Gengenbach and Franz Palm

No 4513, CESifo Working Paper Series from CESifo

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.

Keywords: banks; stock markets; economic growth; panel cointegration; causality (search for similar items in EconPapers)
JEL-codes: E44 G20 O43 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp4513.pdf (application/pdf)

Related works:
Journal Article: Stock Markets, Banks and Long Run Economic Growth: A Panel Cointegration-Based Analysis (2014)
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:ces:ceswps:_4513

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().