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Effects of Financial Development and Institutional Quality on the Economic Growth in The Arabian Gulf states: A Panel Cointegration Analysis

Author

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  • Abdelkarim Yahyaoui

    (Department of Finance and Insurance, College of Business, University of Jeddah, Saudi Arabia,)

  • Majid Ibrahim Al Saggaf

    (Department of Finance and Insurance, College of Business, University of Jeddah, Saudi Arabia,)

Abstract

Many studies on the link between finance and growth, in Arab gulf countries, have suggested however, without demonstrating it, that the relationship between the two spheres goes through the country's specific institutional structure. Nevertheless, this relation is neither well analyzed nor stated in the case of the Gulf States, which justifies the problem of this article. Different estimates were made by the method of panel data for the period from 1995 to 2012 for six Arab Gulf Countries. It appears from these estimates that the quality of the institutions is the transmission vector of the financial sphere towards the real sphere for the case of these countries. So, the financial system cannot stimulate economic growth if it is accompanied by a solid institutional framework presented by a better bureaucracy, a fight against corruption, a strong legal framework and better socio-economic conditions.

Suggested Citation

  • Abdelkarim Yahyaoui & Majid Ibrahim Al Saggaf, 2019. "Effects of Financial Development and Institutional Quality on the Economic Growth in The Arabian Gulf states: A Panel Cointegration Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 9(1), pages 203-211.
    • Handle: RePEc:eco:journ1:2019-01-25
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    3. Clement Olalekan Olaniyi, 2022. "On the transmission mechanisms in the finance–growth nexus in Southern African countries: Does institution matter?," Economic Change and Restructuring, Springer, vol. 55(1), pages 153-191, February.

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    More about this item

    Keywords

    Financial Development; Quality of Institutions; Economic Growth; Panel Data;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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