Financial Development and Economic Growth in BRICS-T Countries: An Econometric Application
Tuncer Gövdeli, Ph.D.
Tuba Özkan, Ph.D.
Murat Dilmaç, Ph.D.
In this study, the cointegration and causality relationships between economic growth and financial development were empirically analyzed using the annual data of BRICS-T countries for the period from 1991 to 2017. Access, depth, and effectiveness data, as well as the variables of Gross Fixed Capital Formation, labor force, and economic growth, representing the capital, are among the indicators representing IMF's financial development. In this empirical study, where three different models were used, the long-term relationship of capital, labor force, and one of the three indicators with economic growth was examined. In the results obtained, all of the three models were found to have cointegration relationships, and it was concluded that the variables would act together in the long term. In addition, causality relationships between access, depth and efficiency, and economic growth, which represent financial development, were also investigated in this empirical study. In the findings, it was found that economic growth was the causative of access; and that there was a two-way causality relationship between depth and economic growth, as well as between efficiency and economic growth. In light of these results, it was concluded that there was a two-way causality between financial development and economic growth.
Keywords: BRICS-T, Dumitrescu and Hurlin Causality Test, Economic Growth, Financial Development
Jel Classification: F130, G180, O47
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Volume 9, Issue 2, 2021
Received: Feb. 5, 2021
Accepted: Aug. 16, 2021
Published: Dec. 31, 2021
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