Financial Development and Economic Growth: Time Series Evidence from Egypt

Suleiman Abu-Bader () and Aamer Abu-Qarn ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the causal relationship between financial development and economic growth in Egypt during the period 1960-2001 within a trivariate VAR setting. We employ four different measures of financial development and apply Granger causality tests using the cointegration and vector error correction methodology. Our results significantly support the view that financial development Granger-causes economic growth either through increasing investment efficiency or through increasing resources for investment. This finding suggests that the financial reforms launched in 1990 can explain the rebound in economic performance since then and that further deepening of the financial sector is an important instrument to stimulate saving/investment and therefore long-term economic growth.

Keywords: Financial development; Economic growth; Egypt; Granger causality; Error-correction models; Cointegration (search for similar items in EconPapers)
JEL-codes: G18 G28 O16 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (15)

Published in Journal of Policy Modeling 5.30(2008): pp. 887-898

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Related works:
Working Paper: FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: TIME SERIES EVIDENCE FROM EGYPT (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:1113

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