Causal Relationship Between Financial Development and Economic Growth: The Case of G7 Countries

Year 2019, Volume: 21 Issue: 3, 888 - 898, 30.09.2019

İbrahim Yağlı , Ebru Topcu

https://doi.org/10.32709/akusosbil.523505

Cited By: 4

Abstract

The causal
relationship between financial development and economic growth is one of the interesting
topics in recent years. However, there is no consensus on the direction of the
relationship and the indicators representing financial development. In this
context, the main purpose of this study is to examine the causality between
financial development and economic growth in the G7 countries during the period
of 2005-2015. From this point of view, financial development is evaluated under
three different categories; depth, efficiency and legal regulations. In each
category, there exist different variables representing financial development.
Therefore, a separate index is constructed for each main group using Principal
Component Analysis. Panel Vector Correction Model results demonstrated that
there is one-way causal relationship from financial development which is
measured by three indices to economic growth. Nevertheless, it is ascertained
that there is bi-directional causal relationship between only efficiency index
out of three indices and economic growth in the short-term. All in all, it can
be said that the direction of the relationship between financial development
and economic growth is from financial development to economic growth for G7
countries and it takes time for the developments in the financial markets to
reflect on economic growth.

Keywords

Financial development, economic growth, principal component analysis, panel causality

Finansal Gelişme ve Ekonomik Büyüme Arasındaki Nedensellik İlişkisi: G7 Ülkeleri Örneği

Abstract

Finansal gelişme ile ekonomik büyüme arasındaki
nedensellik ilişkisi son dönemin ilgi çeken konularındandır. Ancak yapılan
çalışmalarda hem ilişkinin yönü hem de finansal gelişmeyi temsil eden
göstergeler üzerinde bir görüş birliği bulunmamaktadır. Bu bağlamda çalışmanın
temel amacı, 2005-2015 döneminde G7 ülkelerinde finansal gelişme ile ekonomik
büyüme arasındaki nedensellik ilişkisinin incelenmesidir. Bu noktadan hareketle
çalışmada finansal gelişme; derinlik, etkinlik ve yasal düzenlemeler olmak
üzere üç farklı kategori altında incelenmiştir. Her bir kategoride finansal
gelişmeyi temsil eden farklı değişkenler bulunmaktadır. Bu nedenle, Temel
Bileşenler Analizi kullanılarak her bir başlık için ayrı birer endeks
oluşturulmuştur. Panel Vektör Düzeltme Modeli sonuçları, uzun dönemde üç endeks
ile ölçülen finansal gelişmeden ekonomik büyümeye doğru tek yönlü bir
nedensellik ilişkisinin olduğunu ortaya çıkarmıştır. Bununla birlikte, kısa
dönemde üç endeksten sadece etkinlik endeksi ile ekonomik büyüme arasında
karşılıklı bir nedensellik ilişkisinin olduğu tespit edilmiştir. Sonuçlar bir
bütün olarak değerlendirildiğinde, G7 ülkelerinde finansal gelişme ile ekonomik
büyüme arasındaki ilişkinin finansal gelişmeden ekonomik büyümeye doğru olduğu,
finansal piyasalarda yaşanan gelişmelerin ekonomik büyüme üzerindeki
yansımalarının zaman aldığı söylenebilir.

Keywords

Finansal gelişme, ekonomik büyüme, temel bileşenler analizi, panel nedensellik

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