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Does financial development 'lead' economic growth? A vector auto-regression appraisal

Shan, Jordan (2005) Does financial development 'lead' economic growth? A vector auto-regression appraisal. Applied Economics, 37 (12). pp. 1353-1367. ISSN 0003-6846

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Abstract

Using a Vector Autoregression (VAR) approach, several hypotheses are re-examined suggested by the literature concerning the relationship between financial development and economic growth, investment and productivity. The models use quarterly time-series data from ten OECD countries and China. Innovation accounting or variance decomposition and impulse response function analysis is applied to examine interrelationships between variables in the VAR system and, therefore, differs from the more usual Granger causality approach. In particular, it examines the relationship between financial development proxied by total credit. At best, weak support is found for the hypothesis that financial development 'leads' economic growth.

Item Type: Article
Uncontrolled Keywords: ResPubID8794; hypothesis re-examination, Vector Autoregression system, financial development, economic growth, investment, productivity
Subjects: Faculty/School/Research Centre/Department > School of Economics and Finance
FOR Classification > 1503 Business and Management
Depositing User: VUIR
Date Deposited: 06 Jul 2011 02:51
Last Modified: 01 Aug 2011 05:35
URI: http://vuir.vu.edu.au/id/eprint/2839
DOI: 10.1080/00036840500118762
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Citations in Scopus: 57 - View on Scopus

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