BazEkon - Biblioteka Główna Uniwersytetu Ekonomicznego w Krakowie

BazEkon home page

Meny główne

Sharma Shravani (Shri Mata Vaishno Devi University, India), Kumar Supran (Shri Mata Vaishno Devi University, India PhD student)
Dynamics of Financial Development and Economic Growth : Panel Data Analysis for Selected Indian States
Dynamic Econometric Models, 2018, vol. 18, s. 5-34, tab., bibliogr. 104 poz.
Słowa kluczowe
Przyczynowość, Dynamika gospodarki, Wzrost gospodarczy, Dane panelowe
Causality, Economy dynamics, Economic growth, Panel data
Klasyfikacja JEL: G21, C23, O40
With the help of standard refined panel analysis techniques the present study analysed the dynamics of causal relationship between financial development and economic growth for selected Indian states. Mainly focusing on banking level indicators the present attempt measured the extent of financial development in the selected Indian states. Three major econometric techniques including panel unit root tests, cointegration tests and finally the panel error correction model have been implemented for identifying the relationship between variables. Firstly, the series was tested for cross-sectional independence and then checked for the presence of unit roots. The results of both first and second generation unit root indicated an integration of order one for all the variables and a long-run relationship between financial development and respective economic growth indicators was confirmed by the Pedorni's and Westerlund's cointegration tests. The results of the present study emphasized on the critical role of credit provided by banks in the process of long run economic growth across states. Apart from this the results of the study highlighted a very relevant fact that the Indian economy has a lot of scope in harvesting the less financially developed areas of the states which can run rapidly on the greeny path of dynamic and sharp long term sustainable economic growth. (original abstract)
Dostępne w
Biblioteka Szkoły Głównej Handlowej w Warszawie
Pełny tekst
  1. Abu-Bader, S., Abu-Qarn, A. (2007), Financial Development and Economic Growth: The Egyptian Experience, Journal of Policy Modeling, 30(5), 887-898, DOI:
  2. Acharya, D., Amanulla, S., Joy, S. (2009), Financial Development and Economic Growth in Indian States: An Examination, International Research Journal of Finance and Economics, 24, 117-130.
  3. Ageliki, A., Dimitris, K., George, P. (2013), Integrating the Neighbours: A dynamic panel analysis of EU-ENP trade relations, Comparative Economic Studies, 58(1), 1-26, DOI:
  4. Aghion, P., Fally, T., Scarpetta, S. (2007), Credit Constraints as a Barrier to the Entry and Post-Entry Growth of Frm's, Economic Policy, 22(52), 731-779.
  5. Akinboade, O. A. (2000), The Relationship Between Financial Deepening and Economic Growth in Tanzania, Journal of International Development, 12, 939-950, DOI:<939::AID-JID668>3.0.CO;2-I.
  6. Al-Malkawi, H. A. N., Marashdeh, Abdullah, N. (2012), Financial Development and Economic Growth in the UAE: Empirical Assessment using ARDL Approach to Co-Integration, International Journal of Economics and Finance, 4(5), 105-115.
  7. Ardic, O. P., Damar, H. E. (2006), Financial Sector Deepening and Economic Growth: Evidence From Turkey Accessed 26 March 2016, Ardic - paper.pdf.
  8. Arora, R. U. (2012), Finance and Inequality: a Study of Indian States, Applied Economics, 44(34), 4527-4538, DOI:
  9. Aydi, M., Aguir, A. (2017), Financial Development and Economic Growth: The Empirical Evidence of the Southern Mediterranean Countries, International Journal of Economics and Financial Issues, 7(3), 196-209.
  10. Bai, J., Ng, S. (2004), A Panic Attack on Unit Roots and Cointegration, Econometrica, 72(4), 1127-1177, DOI:
  11. Banerjee, A. (1999), Panel Data Unit Roots Tests and Cointegration: an Overview, Oxford Bulletin of Economics and Statistics, 61(1), 607-29, DOI:
  12. Barro, R. J. (1996), Determinants of Economic Growth: A Cross-Country Empirical Study, National Bureau of Economic Research, Working Paper 5698, DOI:
  13. Basu, P., Chakraborty. C., Reagle. D. (2003), Liberalization, FDI, and Growth in Developing Countries: a Panel Cointegration Approach, Economic Inquiry, 41(3), 510-516, DOI:
  14. Beck, T., Levine. R. (2004), Stock Markets, Banks and Growth: Panel Evidence, Journal of Banking and Finance, 28(3), 423-442, DOI:
  15. Beck, T., Levine, R., Loayza, N. (2000), Finance and Source of Growth, Journal of Financial Economics, 58(1), 261-300, DOI:
  16. Berthelemy, J-C., Varoudakis, A. (1995), Clubs de Convergence et Croissance. Le Rôle du Développement Financier et du Capital Humain, Revue Economique, 46(2), 217-235, DOI :
  17. Bhanumati, K., Azhagaiah, R. (2014), Causal Relationship between Stock Price and Gold Price in India: A Granger Causality Test Approach, International Journal of Research in Management, Science and Technology, 2(2), 22-27.
  18. Bhanumurty, N. R., Singh, P. (2013), Financial Sector Development and Economic Growth in Indian States, International Journal of Economic Policy in Emerging Economies, 6(1), 47-63, DOI:
  19. Bhattacharya, P. C., Sivasubramanian, M. N. (2003), Financial Development and Economic Growth in India: 1970-71 to 1998-1999, Applied Financial economics, 13(12), DOI:
  20. Bist, P. J. (2018), Financial Development and Economic Growth: Evidence From a Panel of 16 African and Nonafrican Low-Income Countries, Cogent Economics and Finance, 6(2), 1-17, DOI:
  21. Boyd, J., Prescott, E. (1986), Financial Intermediary Coalitions, Journal of Economic Theory, 38(2), 211-232, DOI:
  22. Boyd, J. H., Smith, B. D. (1998), The Evolution of Debt and Equity Markets in Economic Development, Economic Theory, 12(3), 519-560, DOI:
  23. Breitung, J. (2000), The Local Power of Some Unit Root Tests for Panel Data, in: B. Baltagi ed.., Non-stationary Panels, Panel Cointegration, and Dynamic Panels, Advances in Econometrics, 15, 161-178.
  24. Breitung, J., Pesaran, M. H. (2008), Unit Roots and Cointegration In Panels, in: L. Matyas, and P. Sevestre eds., The Econometrics of Panel Data, third Edition, 279-322, Kluwer Academic.
  25. Breitung, J., Das, S. (2005), Panel Unit Root tests Under Cross-Sectional Dependence, Statis-tica Neerlandica, 59(4), 414-433, DOI:
  26. Demetriades, P. O., James, G. A. (2011), Finance and Growth in Africa: The broken link, Economic Letters, 113 (3), 263-265, DOI:
  27. Demetriades, P. O., Luintel, K. B. (1996), Financial Development, Economic Growth and Banker Sector Controls: Evidence from India, Economic Journal, Royal Economic So-ciety, 106(4), 359-374.
  28. Demetriades, P. O., Luintel, K. B. (1996a), Banking Sector Policies and Financial Development in Nepal. Oxford Bulletin of Economics and Statistics, 58(2), 355-372.
  29. Dicky, D. A., Fuller, W. A. (1979), Distribution of Estimators for Autoregressive Time Series with a Unit Root, Journal of the American Statistical Association, 74(366), 427-431, DOI:
  30. Divino, J. A., Teles, V. K., Andrade, J. P. (2009), On the Purchasing Power Parity for Latin-American Countries, Journal of Applied Economics, 12(1), 33-54, DOI:
  31. Emecheta, B. C., and Ibe, R. C, (2014), Impact of Bank Credit on Economic Growth in Nigeria: Application of Reduced Vector Autoregressive VAR Technique, European Journal of Accounting Auditing and Finance Research, 2(9), 11-21.
  32. Emirmahmutoglu, F., Kose, N. (2011), Testing for Granger Causality in Heterogeneous Mixed Panels, Journal of Economic Modelling, 28(3), 870-876, DOI:
  33. Engle, R. F., Granger, C. W. J. (1987), Cointegration and Error-Correction: Representation, Estimation and Testing, Econometrica, 55, 251-276.
  34. Favara, G. (2003), An Empirical Reassessment of the Relationship between Finance and Growth, IMF Working Paper, no. 03/123.
  35. Fitzgerald, V. (2006), Financial Development and Economic Growth: A Critical View, Ac-cessed 26 January 2016,
  36. Fowowe, B. (2011), Financial Liberalization In Sub-Saharan Africa: What Do We Know? Journal of Economic Surveys, 27(1), 1-37, DOI:
  37. Ghali, K. H. (1998), Public Investment and Private Capital Formation in a Vector Error-Correction Model of Growth, Applied Economics, 30(6), 837-844, DOI:
  38. Giri, A. K., Mohapatra, G. (2012), Financial Development and Economic Growth: Evidence from Indian Economy, International Journal of Applied Research and Studies, 12(1), 1-17, DOI:
  39. Goldsmith, R. W. (1969), Financial Structure and Development, Yale University Press, New Haven.
  40. Greenwood, J., Jovanovic, B. (1990), Financial Development and Economic Development, Economic Development and Cultural Change, 15(3), 257-268.
  41. Gregorio, J. D., Guidotti, E. P. (1995), Financial Development and Economic Growth, World Development 23(3), 433-448.
  42. Gurgul, H., Lach, U. (2012), Financial Development and Economic Growth in Poland in Transition: Causality Analysis, Czech Journal of Economics and Finance, 62(4), 347-367
  43. Hadri, K. (2000), Testing for Stationarity in Heterogeneous Panel Data, Econometrics Journal, 3(2), 148-61, DOI:
  44. Hassan, K. M., Sanchez, B., Yu, J. K. (2011), Financial Development and Economic Growth: New Evidence from Panel Data, The Quarterly Review of Economics and Finance, 51(1), 88-104, DOI:
  45. Hurlin, C. (2004), Testing Granger Causality in Heterogeneous Panel Data Models with Fixed coefficients, Document de recherche LEO.
  46. Hye, Q. M. A. (2011), Financial Development Index and Economic Growth: Empirical Evi-dence from India, The Journal of Risk Finance, 12(2), 98-111, DOI:
  47. Im, Kyung, Pesaran, S., Hashem, M., Shin,Y. (2003), Testing for Unit Roots in Heterogeneous Panels, Journal of Econometrics, 115(1), 53-74, DOI:
  48. Inoue, T., Hamori, S. (2010), How has Financial Deepening Affected Poverty Reduction in India? Empirical Analysis using State Level Panel Data, IDE Discussion paper No.249.
  49. Jayaratne, J, Philip, S. (1996), The Finance-Growth Nexus: Evidence from Bank Branch Deregulation, Quarterly Journal of Economics, 111(3), 639-670, DOI:
  50. Kamal, M. M. K. (2015), An ECM Approach for Long Run Relationship Between Real Exchange Rate and Output Growth: Evidence from Bangladesh, Dhaka University Journal of Science, 63(2), 105-110.
  51. Kamat, M., Kamat M. (2007), Does Financial Growth lead Economic Performance in India? Causality-Cointegration using Unrestricted Vector Error Correction Models, MPRA Paper No. 6154.
  52. Kendall, J. (2012), Local Financial Development and Growth, Journal of Banking and Finance, 36(5), 1548-1562.
  53. King, R. G., Levine, R. (1993a), Finance and Growth: Schumpeter Might Be Right, Quarterly Journal of Economics, 108(3), 717-737, DOI:
  54. King, R. G., Levine, R. (1993b), Finance, Entrepreneurship, and Growth: Theory and Evidence, Journal of Monetary Economics, 32(3), 513-542, DOI:
  55. Korkmaz, S. (2015), Impact of Bank Credits on Economic Growth and Inflation, Journal of Applied Finance and Banking, 5(1), 57-69.
  56. Kumar, R. R., Stauvermann, P. J., Loganathan, N., Kumar, R. D. (2015), Exploring the Role of Energy, Trade and Financial Development in Explaining Economic Growth in South Africa: A revisit, Renewable and Sustainable Energy Reviews, 52, 1300-1311, DOI:
  57. Kumar, S., Chauhan, S. (2015), Impact of Commercial Deposit in Banks with GDP in context with Pradhan Mantri Jan Dhan Yojna, BVIMSR's Journal of Management and Re-search, 7(1), 53-59.
  58. Levin, A., Lin, C. F., Chu, C. S. (2002), Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties, Journal of Economics Metrics, 108(1), 1-24, DOI:
  59. Levine, R., Zervos, S. (1998), Stock Markets, Banks, and Economic Growth, American Eco-nomic Review, 88(3), 537-558.
  60. Lucas, R. E. (1988), On the Mechanics of Economic Development, Journal of Monetary Economics, 101(3), 455-470, DOI:
  61. Lund, M. T. (2010), Foreign Direct Investment: Catalyst of Economic Growth? PhD thesis, University of Utah, Salt Lake City.
  62. Maddala, G. S., Wu, S. (1999), A Comparative Study of Unit Root Tests with Panel Data, Oxford Bulletin of Economics and Statistics, 61(4), 631-52, DOI:
  63. Majid, M. S. A., Mahrizal (2007), Does Financial Development Cause Economic Growth in the ASEAN-countries?, Savings and Development, 31(4), 369-398.
  64. McKinnon, R. I. (1973), Money and Capital in Economic Development Brookings Institution, Washington, DC.
  65. Minija (2012), Financial Development and Economic Growth in India. PhD thesis, Pondicherry University.
  66. Mishra, A., Mishra, V. (2014), Examining the Income Convergence among Indian States: Time Series Evidence with Structural Breaks, accessed on 13 September 2016,
  67. Mishra, B. S. (2003), Allocative Efficiency of the Indian Banking System in the Post Reform Period: A State level Analysis, RBI Occasional Papers, 24(3), 161-186.
  68. Moon, H. R., Perron, B. (2004), Testing for a Unit Root in Panel with Dynamic Factors, Journal of Econometrics, 122, 81-126, DOI:
  69. Moudatsou, A., Kyrkilis, D. (2011), FDI and Economic Growth: Causality for the EU and ASEAN, Journal of Economic Integration 26(3), 554-577.
  70. Naceur, S. B., Ghazouani, S. (2009), Stock Markets, Banks and Economic Growth: Empirical Evidence from The MENA Region, Research in International Business and Finance, 21(2), 297-315, DOI:
  71. Nain, M. Z., Kamaiahn, B. (2014). Financial Development and Economic Growth in India: some Evidence from Non-Linear Causality Analysis, Economic Change Restructuring, 47(4), 299-319, DOI:
  72. Naira (2016), The Impact of Money Deposit Banks on the Economic Development of Nigeria, accessed on 13 September 2016,
  73. Nyasha, S., Odhiambo, N. M. (2018), Financial Development and Economic Growth Nexus: A Revisionist Approach (February 2018), Economic Notes, 47(1), 223-229, DOI:
  74. O'Connell, P. (1998), The Overvaluation of Purchasing Power Parity, Journal of International Economics, 44(1), 1-19, DOI:
  75. Obradovic, S., Grbic, M. (2015), Causality Relationship between Financial Intermediation by Banks and Economic Growth: Evidence from Serbia, Prague Economic Paper, 24(1), 60-72, DOI:
  76. Onuorah, A. C., Ozurumba, B. A. (2013), Bank Credits: An Aid to Economic Growth in Nigeria, Information and Knowledge Management, 33, 1125-1136.
  77. Orsal, D. D. K. (2007), Comparison of Panel Cointegration tests, Humboldt-University Berlin, Germany SBF Discussion Paper No. 29.
  78. Osman, E. G. A. (2014), The Impact of Private Sector Credit on Saudi Arabia Economic Growth GDP: An Econometrics Model Using ARDL. Approach to Cointegration, International Journal of Social Science, 3(6), 109-117.
  79. Pala, A. (2016), Which Energy-Growth Hypothesis is Valid in OECD Countries? Evidence from Panel Granger Causality, International Journal of Energy Economics and Policy, 6(1), 28-34.
  80. Patrick, H. (1966), Financial Development and Economic Growth in Underdeveloped Coun-tries, Economic Development and Cultural Change, 20, 174-189, DOI:
  81. Pedroni, P. (1999). Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Repressors, Oxford Bulletin of Economics and Statistics, 0305-9049, 653-70.
  82. Pedroni, P. (2000), Fully Modified OLS for Heterogeneous Cointegrated Panels, Advances in Econometrics, 15, 93-130.
  83. Pedroni, P. (2004), Panel Cointegration; Asymptotic and Finite Sample Properties of Pooled Time Series Tests, with an Application to the PPP Hypothesis, Econometric Theory, 20, 575-625.
  84. Pesaran, M. H. (2007), A Simple Panel Unit Root Test in the Presence of Cross-Section De-pendence, Journal of Applied Econometrics, 22(2), 265-312, DOI:
  85. Pradhan, P. R. (2011), Financial Development, Growth and Stock Market Development: The Trilateral Analysis in India, Journal of Quantitative Economics, 9(1), 134-145.
  86. Rajan, R. G., Zingales, L. (1998), Financial Dependence and Growth, American Economic Review, 88(3), 559-586.
  87. Ram, R. (1999), Financial Development and Economic Growth: Additional Evidence, Journal of Development Studies, 35(4), 164-174, DOI:
  88. Ramirez, M. D. (2006), Economic and Institutional Determinants of FDI IN Chile: A Time Series Analysis 1960-2001, Contemporary Economic Policy, 24 (3), 459-71, DOI:
  89. Ray, S. (2013), Does Financial Development Promote Economic Growth in India?, Interna-tional Journal of Economic Practices and Theories, 3(3), 140-151.
  90. Robinson, J. (1952), The Generalization of the General Theory, in: The Rate of Interest and Other Essays. MacMillan, London.
  91. Rousseau, P. L., Wachtel, P. (2000), Equity Markets and Growth: Cross Country Evidence on Timing and Outcomes, 1980-95, Journal of Banking and Finance, 24(12), 1933-1957.
  92. Safdari, M., Mahmoodi, M., Mahmoodi, E. (2011), The Causality Relationship between Export and Economic Growth in Asian Developing Countries, American Journal of Scientific Research, 25, 40-45.
  93. Schumpeter, J. A. (1911), Theory of Economic Development, Munich Duncker and Humblot.
  94. Sehrawat, M., Giri, A. K. (2015), Financial Development, Poverty and Rural-Urban Income Inequality: Evidence from South Asian Countries, Qual Quant, 15, 1-14.
  95. Sharma, D., Ranga, M. (2014), Impact of Saving Deposits of Commercial Banks on GDP, Indian Journal of Applied Research, 4(9), 95-96, DOI:
  96. Sharma, R., Bardhan, S. (2016), Finance Growth Nexus Across Indian States: Evidences from Panel Cointegration and Causality Tests, Journal of Economic Change Restructuring, 50(1), 1-20.
  97. Shaw, E. (1973), Financial Deepening in Economic Development, New York: Oxford Uni-versity Press.
  98. Singh, T. (2008), Financial Development and Economic Growth Nexus: a Time-Series Evidence from India, Applied Economics, 40 (12), 1615-1627.
  99. Stern, N. (1989), The Economics of Development: A Survey, The Economic Journal, 99(397), 597-685, DOI:
  100. Tiwary, M. K., Thampy, A. (2015), Financial Development And Economic Growth: Evidence from States in India, Journal of Financial Accounting and Management, 6(1), 41-86.
  101. Westerlund, J. (2007), Testing for Error Correction in Panel Data, Oxford Bulletin of Economics and Statistics, 69,709-748, DOI:
  102. Witkowska, D., and Kompa, K. (2017), How the Change of Governing Party Influences the Efficiency of Financial Market in Poland, Dynamic Econometric Models, 7(1), 147-159.
  103. Yang, Y., Yi, M. (2007), Does Financial Development Cause Economic Growth? Implication for Policy in Korea, Journal of Policy Modeling, 30(5), 827-840, DOI:
  104. Younsi, M., Bechtinib, M, (2018), Economic Growth, Financial Development and Income Inequality in BRICS Countries: Evidence from Panel Granger Causality Tests, Munich Personal RePEc Archive, MPRA Paper No. 85384.
Cytowane przez
Udostępnij na Facebooku Udostępnij na Twitterze Udostępnij na Google+ Udostępnij na Pinterest Udostępnij na LinkedIn Wyślij znajomemu