The Nexus of Economic Growth, Trade Openness and Banking Sector Depth In OIC: An Application of Panel Data Analysis

Year 2019, Volume: 7 Issue: 2, 205 - 238, 31.12.2019

İsmail Durak , Ergün Eroğlu

https://doi.org/10.17093/alphanumeric.640213

Cited By: 1

Abstract

This article is investigated the connections between economic growth, trade openness and banking sector depth, using a panel data set including seventeen countries in the Islamic Cooperation Organization (OIC), where participation and conventional banking co-exist, for the period 1990–2016. Using a multivariate framework, It is primarily found that all the variables are not integrated of order one (I). Since the series are not stationary, cross-dependence tests and Westerlund (2007) cointegration analysis are performed to the series and it is determined that the series are cross-dependent and cointegrated. Then, the models are estimated with three estimators by writing the panel as panel ARDL model to determine the long-term and short-term relations. The results of the study indicate a general long-run equilibrium connection between economic growth, trade openness and banking sector depth as well as a short-run connection among these variables. Policy suggestions include those that will increase greater banking sector depth as well as promoted trade openness.

Keywords

Economic Growth, Trade Openness, Banking Sector Depth, Panel Data, Participation Banking

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