The impacts of financial development on growth: A time-varying causality analysis for Turkey

Abstract

Abstract

Bank-Based Financial Development and Economic Growth: Time-Varying Causality Analysis for Egypt

“…This measure excludes credit to public sector and credit issued by the CBE and, thus, it measures the effectiveness of financial intermediaries in transferring savings to investors. Hence, it is more closely related with the impact of financial development on investment and economic development than other measures (Ak et al, 2016). Both variables are transformed into natural logarithms.…”

“…This conclusion confirms to that of (Bolbol et al, 2005) who found that BBFD (measured as the ratio of private credit to GDP) had a positive influence on total factor productivity growth at higher levels of GDP per capita. Furthermore, Ak et al (2016) Moreover, the causality pattern showed a bidirectional relationship between banking sector development and stock market development and, thus, they were found to be complementary rather than substitutes in Egypt. To sum up and according to the survey conducted by (Nyasha & Odhiambo, 2014), the relationship between EG and BBFD varies depending on, inter alia, the proxy employed to measure the level of bank financial development; the level of development of the sample countries; data sets; and the methodology used.…”

“…Thus, time series approaches that consider an individual country's specificity enable researchers to examine the causality pattern. The current study uses the most recent techniques applied by Ak et al (2016) to examine the causal links between BBFD and EG in Egypt over the period 1960-2016.…”

“…Using this ratio as a proxy for BBFD is highly recommended by many scholars (e.g. Ak et al, 2016) since it reflects the effectiveness of financial intermediaries in transferring savings to investors. The objective of the current study is to examine the time-varying causal link between EG and BBFD in Egypt over the period 1960-2016, using bootstrap Granger non-causality tests in a rolling window procedure.…”

“…Recent research conducted by Balcilar et al (2010), Ak et al (2016), Ahmed and Abdelsalam (2017) and Ahmed and Naguib (2018) documented that relationship between economic and financial variables vary across time. Following Ak et al (2016), the bootstrap approach to Toda-Yamamoto (1995) modified causality test, which does not require foreknowledge of cointegration, is applied. In other word, the residual bootstrap (RB) based modified-LR statistics is employed for the whole sample and then instability tests are executed.…”