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Financial Development and Economic Growth: Evidence from North African Countries

Author

Listed:
  • Zouheir Abida

    (University of Sfax, Tunisia)

  • Imen Mohamed Sghaier

    (University of Sfax, Tunisia)

  • Nahed Zghidi

    (University of Sfax, Tunisia)

Abstract

This paper examines the causal relationship between financial development and economic growth in a panel of three countries of North Africa (Tunisia, Morocco, and Egypt) over the 1980-2012 period. By using system Generalized Method of Moment (GMM) estimator for linear dynamic panel data models, we find a strong positive link between financial development and economic growth when alternative measures of financial development were used. We also found that economic freedom is beneficial to growth, while democracy may have a small negative effect. These findings suggest the need to promote the financial reforms that have been launched since the mid 1980s and to improve the efficiency of these countries’ financial systems to stimulate saving/ investment and, consequently, long-term economic growth

Suggested Citation

  • Zouheir Abida & Imen Mohamed Sghaier & Nahed Zghidi, 2015. "Financial Development and Economic Growth: Evidence from North African Countries," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 17-33, April.
    • Handle: RePEc:nwe:eajour:y:2015:i:2:p:17-33
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    More about this item

    Keywords

    economic growth; financial development; dynamic panel data analysis;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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