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Financial Development and Economic Growth: A Revised Empirical Study for Ireland

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  • Antonios Adamopoulos

Abstract

This study is a revised empirical research examining the relationship between financial development and economic growth for Ireland for the period 1965-2011. The objective of this study is to examine the long-run relationship between financial development and economic growth taking into account the positive effect of industrial production index. For this purpose usual classical econometric methods are adopted. A vector error correction model is estimated based on Johansen cointegration analysis and stationarity tests. Finally, Granger causality method is applied in order to define the direction of causality between the examined variables. The empirical results indicated that there is a bilateral causal relationship between economic growth and industrial production, while there is a unidirectional causality between economic growth and credit market development. Also, stock market development causes economic growth and industrial production. Therefore, it can be inferred that stock market development has a direct causal effect on economic growth taking into account the positive effect of industrial production growth on economic growth for Ireland.

Suggested Citation

  • Antonios Adamopoulos, 2013. "Financial Development and Economic Growth: A Revised Empirical Study for Ireland," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 25-33.
    • Handle: RePEc:ers:journl:v:xvi:y:2013:i:2:p:25-33
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    References listed on IDEAS

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    More about this item

    Keywords

    financial development; economic growth; Granger causality;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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