Financial Development and Economic Growth Nexus in the South Mediterranean Countries (SMCs)

Abstract

This article investigates the presence of asymmetries in the short- and long-run relationships between financial development and economic growth covering four SMCs from 1984 to 2017 by applying the nonlinear ARDL. We factored three financial development measures that detected the financial depth and the credit to private sector taken one by one and together in four models. The empirical evidence provides significant evidence of both short-run and long-run asymmetries between the interest variables. The main conclusion drown from this paper is that in the event that policymakers place more emphasis on policies that develop financial depth and credit for private sector, a concomitant effect would positively impact long-run growth in Algeria, Egypt, Morocco and Tunisia.