Financial developmment and economic growth: The Albanian case
Author: Elona Dushku
Printed on: 15.07.2010
Production date: 15.07.2010
Material category : Not Periodic Publications / Working Papers
This paper examines the causal relationship between financial
development and economic growth for the Albanian economy using
the Granger causality test for five different proxies for financial
development. For the non-stationary and non-cointegrated series, the
VAR model has been constructed and later, the above test has been
applied. For non-stationary series but with a cointegrating relationship,
the Granger-causality test has been applied after the construction of
the vector error correction model (VECM). The empirical findings of
the study show that there is a positive relation between all indicators
measuring the financial development and economic growth in the
long term. While in the short term, this relation is quite vague since
different indicators provide different results. The data used in this
paper belong to the period 1996-2007.