• ISSN: 2148-2225 (online)

Ulaştırma ve Lojistik Kongreleri

alphanumeric journal

The Journal of Operations Research, Statistics, Econometrics and Management Information Systems

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

Suggested citation

Gövdeli, T., Özkan, T., Dilmaç, M. (2021). Financial Development and Economic Growth in BRICS-T Countries: An Econometric Application. Alphanumeric Journal, 9(2), 163-178. http://dx.doi.org/10.17093/alphanumeric.875411


  • Acaravci, A., Ozturk, I. & Acaravci, S. K. (2007). Finance – Growth Nexus: Evidence from Turkey. Available at SSRN: https://ssrn.com/abstract=1401590 or http://dx.doi.org/10.2139/ssrn.1401590.
  • Aslan, Ö. & Korap, H. L. (2006). Türkiye’de Finansal Gelişme ve Ekonomik Büyüme İlişkisi. Muğla Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 17, 1-20.
  • Bai, J. & Ng, S. (2004). A Panic attack on unit roots and cointegration. Econometrica, 72(4), 1127-1177.
  • Bayar, Y. (2014). Financial development and economic growth in emerging Asian countries, Asian Social Science, 10(9), 8.
  • Borlea, S. N., Mare, C., Achim, M. V. & Puscas, A. (2016). Direction of causality between financial development and economic growth. Evidence for developing countries, Studia Universitatis “Vasile Goldis” Arad–Economics Series, 26(2), 1-22.
  • Bozoklu, Ş. & Yılancı, V. (2013). Finansal Gelişme ve İktisadi Büyüme Arasındaki Nedensellik İlişkisi: Gelişmekte Olan Ekonomiler İçin Analiz. Dokuz Eylül Üniversitesi İktisadi İdari Bilimler Fakültesi Dergisi, 28(2), 161-187.
  • Breusch, T. S. & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253.
  • Calderón, C. & Liu, L. (2003). The Direction of Causality Between Financial Development and Economic Growth, Journal of Development Economics, 72(1), 321-334.
  • Caporale, G. M., Rault, C., Sova, A. D. & Sova, R. (2015). Financial development and economic growth: Evidence from 10 new European Union members, International Journal of Finance & Economics, 20(1), 48-60.
  • Cojocaru, L., Falaris, E. M., Hoffman, S. D. & Miller, J. B. (2016). Financial System Development and Economic Growth in Transition Economies: New Empirical Evidence from The CEE and CIS Countries. Emerging Markets Finance and Trade, 52(1), 223-236.
  • Demetriades, P. O., Rousseau, P. L. & Aewilak, J. (2017). Finance, Growth and Fragility. University of Leicester. Working Paper, No:17/13.
  • Demez, S., Kızılkaya, O. & Dağ, M. (2019). Finansal Gelişme ve Büyüme İlişkisi: Türkiye için Bootstrap Nedensellik Analizi. Business & Economics Research Journal, 10(3).
  • Dumitrescu, E. I. & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic modelling, 29(4), 1450-1460.
  • Ekpeno, L.E. (2015). Financial development, institutions and economic growth: Evidence from Sub-Saharan Africa. Economic Development in Africa, United Kingdom: St. Catherine’s College, Oxford University.
  • Erataş Sönmez, F. & Sağlam, Y. (2019). The Relationship between Financial Development and Economic Growth for Developing Countries: Panel Causality Analysis. Sosyoekonomi, 27(42), 87-106.
  • Erim, N. & Türk, A. (2005). Finansal Gelişme ve İktisadi Büyüme. Kocaeli Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 10(2), 21-45.
  • Güneş, S. (2013). Finansal Gelişmişlik ve Büyüme Arasındaki Nedensellik Testi: Türkiye Örneği. Doğuş Üniversitesi Dergisi, 14(1), 73-85.
  • Hagmayr, B., Haiss, P. R. & Sümegi, K. (2007). Financial Sector Development and Economic Growth - Evidence for Southeastern Europe. Available at SSRN: https://ssrn.com/abstract=968253 or http://dx.doi.org/10.2139/ssrn.968253.
  • Helhel, Y. (2018). Financial Development and Economic Growth Relationship: An Analysis With Credit Based Financial Index. Business and Economics Research Journal, 9(4), 761-771. doi: 10.20409/berj.2018.137.
  • Helhel, Y. (2019). Kırılgan Beşli Ülkelerde Hisse Senedi Piyasası Gelişimi ve Ekonomik Büyüme İlişkisi. İşletme ve İktisat Çalışmaları Dergisi, 7(1), 19-29. doi: 10.32479/iicd.151
  • Kacho, A. A. & Dahmardeh, N. (2017). The Effects of Financial Development and Institutional Quality on Economic Growth with the Dynamic Panel Data Generalized Moment Method Method: Evidence from the Organization for Economical Cooperation and Development Countries. International Journal of Economics and Financial Issues, 7(3), 461-467.
  • Kar, M. & Tuncer, M. (1999). Finansal Kalkınma ve Ekonomik Büyüme. Uludağ Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 17(3), 15-30.
  • Levine, R., Loayza, N. & Beck, T. (2000). Financial Intermediation and Growth: Causality and Causes. Journal of Monetary Economics, 46, 31-77.
  • Ofori-Abebrese, G., Pickson, R. B. & Diabah, B. T. (2017). Financial Development and Economic Growth: Additional evidence from Ghana. Modern Economy, 8, 282-297. doi: 10.4236/me.2017.82020.
  • Pesaran, M. H. (2004). General Diagnostic Tests for Cross Section Dependence in Panels. Cambridge Working Papers in Economics 0435, University of Cambridge.
  • Polat, B. (2019). The Linkage between Economic Growth and Openness: Does Financial Development Matter?. İşletme Araştırmaları Dergisi, 11(1), 120-128.
  • Puryan, V. (2017). The Causal Relationship Between Economic Growth, Banking Sector Development and Stock Market Development in Selected Middle-East and North African Countries. International Journal of Economics and Financial Issues, 7(3), 575-580.
  • Rachdi, H. & M’barek, H. B. (2011). The causality between financial development and economic growth: Panel data cointegration and GMM system approaches. International Journal of Economics and Finance, 3(1), 143-151.
  • Rousseau, P.L. & Wachtel, P. (2011). What is Happening to The Impact of Financial Deepening on Economic Growth?. Economic Inquiry, 49: 276-288. doi:10.1111/j.1465-7295.2009.00197.x.
  • Şahin, Ü. D. & Durmuş, Ü. S. (2019). Yapısal Kırılmalı Testlerle Türkiye'de Bankacılık Sektörü Kredileri ve Ekonomik Büyüme İlişkisinin Analizi. Mali Çözüm Dergisi/Financial Analysis, (151).
  • Westerlund, J. & Edgerton, D. L. (2007). A panel bootstrap cointegration test. Economics Letters, 97(3), 185-190.
  • Yağlı, İ. & Topcu, E. (2019). Finansal Gelişme ve Ekonomik Büyüme Arasındaki Nedensellik İlişkisi: G7 Ülkeleri Örneği. Afyon Kocatepe Üniversitesi Sosyal Bilimler Dergisi, 21(3), 888-898.
  • Yerdelen Tatoğlu, F. (2013). İleri panel veri analizi: Stata uygulamalı. Beta Yayınları: İstanbul.
  • Yıldırım, A. & Gökalp, M.F. (2015). Institutions and Economic Performance: A Review on the Developing Countries. Istanbul Conference of Economics and Finance, ICEF 2015, 22-23 October 2015, Istanbul, Turkey: Elsevier Science, Procedia Economics and Finance, 38, 347-359.

Volume 9, Issue 2, 2021


alphanumeric journal

Volume 9, Issue 2, 2021

Pages 163-178

Received: Feb. 5, 2021

Accepted: Aug. 16, 2021

Published: Dec. 31, 2021

Full Text [654.6 KB]

  • Share

2021 Gövdeli, T., Özkan, T., Dilmaç, M.

This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence, which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.

Creative Commons Attribution licence

scan QR code to access this article from your mobile device

Contact Us

School of Transportation and Logistics, Istanbul University
Avcilar Campus 34320 Avcilar/Istanbul/TURKEY

Bahadır Fatih Yıldırım, Ph.D.
+ 90 (212) 473 70 00 - 19263

alphanumeric journal

alphanumeric journal has been publishing as "International Peer-Reviewed Journal" every six months since 2013. alphanumeric serves as a vehicle for researchers and practitioners in the field of quantitative methods, and is enabling a process of sharing in all fields related to the operations research, statistics, econometrics and management informations systems in order to enhance the quality on a globe scale.