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Financial deepening and economic growth in Gulf Cooperation Council countries

Helmi Hamdi (), Rashid Sbia () and Bedri Tas

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to investigate the causal relationship between financial development and economic growth in GCC countries for the period 1980-2010. To this end we use a multivariate vector autoregressive (VAR) framework by including investment as an additional variable to the finance and growth nexus. Our empirical analysis is based on a modified version of the Granger non-causality test by applying the Toda and Yamamoto procedure. The overall empirical results reveal that financial development contributes significantly to economic growth in the GCC context. Our results could be of great interest for policymakers since the financial sector could play a crucial role in lowering the dependence of the governments to oil revenues and could contribute significantly to spur economic growth.

Keywords: GCC; Finance-growth nexus; Toda-Yamamoto Causality (search for similar items in EconPapers)
JEL-codes: C3 C5 E6 (search for similar items in EconPapers)
Date: 2012, Revised 2012
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Related works:
Journal Article: Financial Deepening and Economic Growth in Gulf Cooperation Council Countries (2014) Downloads
Working Paper: Financial Deepening and Economic Growth in Gulf Cooperation Council Countries (2014)
Working Paper: Financial Deepening and Economic Growth in Gulf Cooperation Council Countries (2014)
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