Mohammad Ali Aboutorabi; Mohammad ali Falahi
Abstract
According to the relationship between financial development and economic growth, the question is whether the type of financial structure (bank-based or market-based financial system) can affect the economic growth? This paper attempts to find an answer to the above mentioned question by surviving the ...
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According to the relationship between financial development and economic growth, the question is whether the type of financial structure (bank-based or market-based financial system) can affect the economic growth? This paper attempts to find an answer to the above mentioned question by surviving the effect of financial development of banks and stock markets in some MENA countries.
The Principal components analysis is used to derive a multilateral index for financial development. Moreover, using panel data econometrics, the role of banking system and stock market in encouraging economic growth in the studied countries is investigated.
The results indicate that the effect of banking system development on the economic growth in these countries is significantly negative while the effect of stock market development in spite of being positive is not statistically significant. These results are contrary to the observed empirical evidences in developed countries which are due to the specific and different characteristics of financial markets in developing countries. Therefore, in the case of these countries, it seems that the planning for “financial development” is essential before any controversy over the type of “financial structure”.
Mohammad javad razmi; Seyed mahdi mostafavi; Mohadese Mahmoodi
Abstract
Economic growth is one of the goals any country that always been considered by policy makers and planners. In recent years researching the relationship between financial development and economic growth is of particular importance and intensive studies have been performed in this field. On the other hand, ...
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Economic growth is one of the goals any country that always been considered by policy makers and planners. In recent years researching the relationship between financial development and economic growth is of particular importance and intensive studies have been performed in this field. On the other hand, financial development is caused by a factor, such as trade liberalization. The usual view is that, trade liberalization with led securities to the efficient investment opportunities will lead to financial market development. But there is a different opinion about this theory they believe trade development is limited to financial economics.
In this regard, this study tries to investigate by using panel data for the group of developing countries that their financial system is the same (The indicators of financial development).
The results of this study show that trade openness policies for financial development that now is a major economy of the countries, is not appropriate, at least in the early stages.
