Financial development and economic growth: evidence from the European Union, Managerial Finance, 36(11): 949-957. 2010. In common with M. Trigoni
Financial development and economic growth: evidence from the European Union, Managerial Finance 36(11): 949-957. (SCOPUS, EconLit Listed). In common with M. Trigoni (2010).
In this study we try to detect the relationship between finance and growth in the European Union countries, using the newly developed econometric techniques, in an attempt to detect the direction of causations and search the mechanisms through which they interact. The results show that the rate of GDP/c is not directly affected by the size of the financial system, expressed by the ratio of domestic credit to GDP, but only through indicators of monetary policy such as deposit rate and inflation. In the hort run, the relationship between finance and growth is weak while finance, growth and monetary indicators are correlated in the long run. Also an indirect linkage between finance and growth through the impact of interest rate and inflation is implied.
JEL Classification Codes: E5, G0