Financial Development and Income in Developing Countries

Mina Baliamoune

ICER Working Papers from ICER - International Centre for Economic Research

Abstract: This paper presents an empirical analysis of the controversial relationship between financial system development and economic development. Using cointegration and VAR estimations on annual data from Africa, we examine the nature of the relationship between financial development and income. We find mixed results on both the short and the long-run relationships between the two variables. We find finance causing income, income causing finance, and bi-directional causality. The results indicate that neither the short-run effects nor the long-run relationship seem to linearly depend on the level of financial development or the stage of development.

JEL-codes: E44 G20 O16 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-05
New Economics Papers: this item is included in nep-afr and nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:icr:wpicer:09-2010

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