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Short-term effects of productive credit, savings and money demand on Ecuador’s economic growth, 2006–2020

Author

Listed:
  • Armando Urdaneta Montiel
  • Emmanuel Vitorio Borgucci Garcia
  • Segundo Camino-Mogro

Abstract

Purpose - This paper aims to determine causal relationships between the level of productive credit, real deposits and money demand – all of them in real terms – and Gross National Product between 2006 and 2020. Design/methodology/approach - The vector autoregressive technique (VAR) was used, where data from real macroeconomic aggregates published by the Central Bank of Ecuador (BCE) are correlated, such as productive credit, gross domestic product (GDP) per capita, deposits and money demand. Findings - The results indicate that there is no causal relationship, in the Granger sense, between GDP and financial activity, but there is between the growth rate of real money demand per capita and the growth rate of total real deposits per capita. Originality/value - The study shows that bank credit mainly finances the operations of current assets and/or liabilities. In addition, economic agents use the banking system mainly to carry out transactional and precautionary activities.

Suggested Citation

  • Armando Urdaneta Montiel & Emmanuel Vitorio Borgucci Garcia & Segundo Camino-Mogro, 2024. "Short-term effects of productive credit, savings and money demand on Ecuador’s economic growth, 2006–2020," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 29(58), pages 309-325, April.
    • Handle: RePEc:eme:jefasp:jefas-03-2023-0081
    DOI: 10.1108/JEFAS-03-2023-0081
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    More about this item

    Keywords

    Economic growth; Productive credit; Money demand; Real deposits; Autoregressive vectors; E51; O40; C32;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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