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THE CAUSALITY AMONG FINANCIAL SECTOR DEVELOPMENT, TRADE OPENNESS AND ECONOMIC GROWTH: PANEL-VAR EVIDENCE FROM EMERGING MARKET AND DEVELOPING ECONOMIES

Year 2019, Volume: 17 Issue: 1, 441 - 457, 01.03.2019
https://doi.org/10.11611/yead.423374

Abstract

This study examines the causality among financial sector development, trade openness and economic growth in emerging market and developing economies. The Panel Vector Autoregressive approach in Abrigo and Love (2015) is applied 86 countries over the period of 1998-2016. The country sample is divided into two groups as low and lower-middle income countries, and upper-middle and high income countries. By doing so, it is investigated how the differentiation in income level affects the causality among variables. The findings suggest that there is causality from economic growth to trade openness and from trade openness to financial sector development in low and lower-middle income countries. Moreover, financial sector development is found as a key determinant of economic growth in this country group. The results also show that there is Granger causality running from economic growth to trade openness and from trade openness to financial sector development in upper-middle and high income countries

References

  • Abrigo M. ve Love. I. (2015) “Estimation of panel vector autoregression in Stata: a package of programs”, http://paneldataconference2015.ceu.hu/Program/Michael-Abrigo.pdf., (15.10.2016).
  • Andrews, D.W.K. ve Lu, B. (2001) “Consistent model and moment selection procedures for GMM estimation with application to dynamic panel data models”, Journal of Econometrics, 101(1), 123-164.
  • Arellano, M. ve Bover, O. (1995) “Another look at the instrumental variable estimation of error-components model”, Journal of Econometrics, 68(1), 29-51.
  • Altaee, H.H.A. ve Al-Jafari, M.K. (2015) “Financial Development, Trade Openness and Economic Growth: A Trilateral Analysis of Bahrain”, International Journal of Economics and Finance, 7(1), 241–254.
  • Awokuse, T.O. (2008) “Trade openness and economic growth: is growth export-led or import-led?”, Applied Economics, 40(2), 161-173.
  • Ayad, H. ve Belmokaddem, M. (2017) “Financial development, trade openness and economic growth in MENA countries: TYDL panel causality approach”, Theoretical and Applied Economics, 24(1), 233-246.
  • Baldwin, R.E. (2003) “Openness and growth: What is the empirical relationship?”, NBER Working Paper, 9578.
  • Baltagi, B., Demetriades, P. ve Law, S. H. (2009) “Financial Development, Openness, and Institutions: Evidence from Panel Data”, Journal of Development Economics, 89 (2), 285 – 296.
  • Beck, T. (2003) “Financial Dependence and International Trade”, Review of International Economics, 11(2), 296-316.
  • Bollano, J. ve Ibrahimaj, D. (2015) “Current Account Determinants in Central Eastern European Countries”, Graduate Institute of International and Development Studies International Economics Department Working Paper Series, HEIDWP0022-2015.
  • Časni, A. C., Dumičić, K. ve Tica, J. (2016) “The Panel VAR Approach to Modelling the Housing Wealth Effect: Evidence from selected European post-transition economies”, Naše gospodarstvo/Our Economy, 62 (4), 23–32.
  • Chandio, A.A., Rehman, A., Jiang, Y. ve Joyo, M.A. (2017) “Financial development, trade openness and economic growth in Pakistan: A Granger causality approach”, International Journal of Advanced and Applied Sciences, 4(4), 73-80.
  • Galariotis, E., Makrichpriti, P. ve Spyrou, S. (2016) “Sovereign CDS spread determinants and spill-over effects during financial crisis: A panel VAR approach”, Journal of Financial Stability, 26, 62-77.
  • Ghartey, E.E. (1993) “Causal relationship between exports and economic growth: some empirical evidence in Taiwan, Japan, and the US”, Applied Economics, 25(9), 1145–1152.
  • Gries, T., Kraft, M., ve Rieks, M. (2009) “Linkages Between Financial Deepening, Trade Openness and Economic Development: Causality Evidence from Sub-Saharan Africa”, World Development, 37(12), 1849-1860.
  • Gungor, H. ve Simon, A.U. (2017) “Energy Consumption, Finance and Growth: The Role ofUrbanization and Industrialization in South Africa”, International Journal of Energy Economics and Policy, 7(3), 268-276.
  • Harrison, A. (1996) “Openness and growth: A time-series, cross-country analysis for developing countries”, Journal of Development Economics, 48, 419-447.
  • Kar, M., Nazlioglu, Ş. ve Ağır, H. (2014) “Trade Openness, Financial Development and Economic Growth in Turkey: Linear and Nonlinear Causality Analysis”, BDDK Bankacılık ve Finansal Piyasalar, 8(1), 63-86.
  • Kar, M., Peker, O. ve Kaplan, M. (2008) “Trade Liberalization, Financial Development and Economic Growth in the Long-Term: The Case of Turkey”, South East European Journal of Economics and Business, 3(2), 25-38.
  • Lawal, A. I., Nwanji, T. I., Asaleye A. ve Ahmed V. (2016) “Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach”, Cogent Economics & Finance, 4, 1-15.
  • Lawrence, R.Z. ve Weinstein, D.E. (1999) “Trade and growth: import-led or export-led? Evidence from Japan and Korea”, NBER Working Paper, 7264.
  • Levine, R. (1997) “Financial development and economic growth: Views and agenda”, Journal of Economic Literature, 35, 688–726.
  • Love I. ve Zicchino L. (2006) “Financial development and dynamic investment behaviour: Evidence from panel VAR”, The Quarterly Review of Economics and Finance, 46, 190-210.
  • Mamoon, M. ve Rahman, A.F.M.A. (2016) “Effects of Foreign Direct Investment (FDI) on Bangladeshi Labor Market”, 6(3), 46-60.
  • Menyah, K., Nazlioglu, S., ve Wolde-Rufael, Y. (2014) “Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach”, Economic Modelling, 37, 386–394.
  • Patrick, H.T. (1966) “Financial Development and Economic Growth in Underdeveloped Countries”, Economic Development and Cultural Change, 14(2), 174-189.
  • Rajan, R.G. ve Zingales, L., (2003) “The great reversals: the politics of financial development in the twentieth century”, Journal of Financial Economics, 69, 5-50.
  • Romer, P.M. (1989) “What determines the rate of growth and technical change?”, World Bank Research Working paper, 279.
  • Saaed, A.A.J. ve Hussain, M.A. (2015) “The Causal Relationship among Trade Openness, Financial Development and Economic Growth: Evidence from Kuwait”, Journal of Emerging Issues in Economics, Finance and Banking, 4(1), 1385-1413.
  • Sehrawat, M. ve Giri A.K. (2017) “Financial Structure, Interest Rate, Trade Openness and Growth: Time Series Analysis of Indian Economy”, Global Business Review, 18(5), 1278–1290.
  • Sharma, S., ve Dhakal. D. (1994) "Causal Analyses Between Exports and Economic Growth in Developing Countries", Applied Economics, 26(12), 1145-1157.
  • Svaleryd, H., ve Vlachos, J. (2002) “Markets for Risk and Openness to Trade: How Are They Related?”, Journal of International Economics, 57, 369-395.
  • Türedi, S. ve Berber, M. (2010) “Finansal Kalkınma, Ticari Açıklık ve Ekonomik Büyüme Arasındaki İlişki: Türkiye Üzerine Bir Analiz”, Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 35, 301-316.

FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ

Year 2019, Volume: 17 Issue: 1, 441 - 457, 01.03.2019
https://doi.org/10.11611/yead.423374

Abstract

Bu çalışmada, yükselen piyasa ve gelişmekte olan ekonomilerde finansal sektör gelişimi, ticari açıklık ve ekonomik büyüme arasındaki nedensellik ilişkisi incelenmiştir. Abrigo ve Love (2015)’in Panel Vektör Otoregresif yaklaşımı 86 ülkeden oluşan bir örnekleme, 1998-2016 dönemi için uygulanmıştır. Çalışmaya dahil edilen ülkeler gelir seviyelerine göre düşük ve alt-orta gelir ile üst-orta ve yüksek gelirli olmak üzere iki gruba ayrılmıştır. Böylelikle gelir seviyesindeki farklılaşmanın değişkenler arasındaki nedensellik ilişkilerini nasıl etkilediği araştırılmıştır. Çalışmanın ampirik bulguları, düşük ve alt-orta gelir ülke grubunda ekonomik büyümeden ticari açıklığa ve ticari açıklıktan finansal sektör gelişimine doğru nedensellik ilişkileri olduğunu göstermektedir. Ayrıca, düşük ve alt-orta gelir ülke grubu için finansal sektör gelişimi ekonomik büyümenin önemli bir belirleyicisi olarak bulunmuştur. Sonuçlar, üst-orta ve yüksek ülke grubu için de ekonomik büyümeden ticari açıklığa ve ticari açıklıktan finansal sektör gelişimine doğru Granger-nedensellik ilişkisinin olduğuna dair kanıt sunmaktadır

References

  • Abrigo M. ve Love. I. (2015) “Estimation of panel vector autoregression in Stata: a package of programs”, http://paneldataconference2015.ceu.hu/Program/Michael-Abrigo.pdf., (15.10.2016).
  • Andrews, D.W.K. ve Lu, B. (2001) “Consistent model and moment selection procedures for GMM estimation with application to dynamic panel data models”, Journal of Econometrics, 101(1), 123-164.
  • Arellano, M. ve Bover, O. (1995) “Another look at the instrumental variable estimation of error-components model”, Journal of Econometrics, 68(1), 29-51.
  • Altaee, H.H.A. ve Al-Jafari, M.K. (2015) “Financial Development, Trade Openness and Economic Growth: A Trilateral Analysis of Bahrain”, International Journal of Economics and Finance, 7(1), 241–254.
  • Awokuse, T.O. (2008) “Trade openness and economic growth: is growth export-led or import-led?”, Applied Economics, 40(2), 161-173.
  • Ayad, H. ve Belmokaddem, M. (2017) “Financial development, trade openness and economic growth in MENA countries: TYDL panel causality approach”, Theoretical and Applied Economics, 24(1), 233-246.
  • Baldwin, R.E. (2003) “Openness and growth: What is the empirical relationship?”, NBER Working Paper, 9578.
  • Baltagi, B., Demetriades, P. ve Law, S. H. (2009) “Financial Development, Openness, and Institutions: Evidence from Panel Data”, Journal of Development Economics, 89 (2), 285 – 296.
  • Beck, T. (2003) “Financial Dependence and International Trade”, Review of International Economics, 11(2), 296-316.
  • Bollano, J. ve Ibrahimaj, D. (2015) “Current Account Determinants in Central Eastern European Countries”, Graduate Institute of International and Development Studies International Economics Department Working Paper Series, HEIDWP0022-2015.
  • Časni, A. C., Dumičić, K. ve Tica, J. (2016) “The Panel VAR Approach to Modelling the Housing Wealth Effect: Evidence from selected European post-transition economies”, Naše gospodarstvo/Our Economy, 62 (4), 23–32.
  • Chandio, A.A., Rehman, A., Jiang, Y. ve Joyo, M.A. (2017) “Financial development, trade openness and economic growth in Pakistan: A Granger causality approach”, International Journal of Advanced and Applied Sciences, 4(4), 73-80.
  • Galariotis, E., Makrichpriti, P. ve Spyrou, S. (2016) “Sovereign CDS spread determinants and spill-over effects during financial crisis: A panel VAR approach”, Journal of Financial Stability, 26, 62-77.
  • Ghartey, E.E. (1993) “Causal relationship between exports and economic growth: some empirical evidence in Taiwan, Japan, and the US”, Applied Economics, 25(9), 1145–1152.
  • Gries, T., Kraft, M., ve Rieks, M. (2009) “Linkages Between Financial Deepening, Trade Openness and Economic Development: Causality Evidence from Sub-Saharan Africa”, World Development, 37(12), 1849-1860.
  • Gungor, H. ve Simon, A.U. (2017) “Energy Consumption, Finance and Growth: The Role ofUrbanization and Industrialization in South Africa”, International Journal of Energy Economics and Policy, 7(3), 268-276.
  • Harrison, A. (1996) “Openness and growth: A time-series, cross-country analysis for developing countries”, Journal of Development Economics, 48, 419-447.
  • Kar, M., Nazlioglu, Ş. ve Ağır, H. (2014) “Trade Openness, Financial Development and Economic Growth in Turkey: Linear and Nonlinear Causality Analysis”, BDDK Bankacılık ve Finansal Piyasalar, 8(1), 63-86.
  • Kar, M., Peker, O. ve Kaplan, M. (2008) “Trade Liberalization, Financial Development and Economic Growth in the Long-Term: The Case of Turkey”, South East European Journal of Economics and Business, 3(2), 25-38.
  • Lawal, A. I., Nwanji, T. I., Asaleye A. ve Ahmed V. (2016) “Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach”, Cogent Economics & Finance, 4, 1-15.
  • Lawrence, R.Z. ve Weinstein, D.E. (1999) “Trade and growth: import-led or export-led? Evidence from Japan and Korea”, NBER Working Paper, 7264.
  • Levine, R. (1997) “Financial development and economic growth: Views and agenda”, Journal of Economic Literature, 35, 688–726.
  • Love I. ve Zicchino L. (2006) “Financial development and dynamic investment behaviour: Evidence from panel VAR”, The Quarterly Review of Economics and Finance, 46, 190-210.
  • Mamoon, M. ve Rahman, A.F.M.A. (2016) “Effects of Foreign Direct Investment (FDI) on Bangladeshi Labor Market”, 6(3), 46-60.
  • Menyah, K., Nazlioglu, S., ve Wolde-Rufael, Y. (2014) “Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach”, Economic Modelling, 37, 386–394.
  • Patrick, H.T. (1966) “Financial Development and Economic Growth in Underdeveloped Countries”, Economic Development and Cultural Change, 14(2), 174-189.
  • Rajan, R.G. ve Zingales, L., (2003) “The great reversals: the politics of financial development in the twentieth century”, Journal of Financial Economics, 69, 5-50.
  • Romer, P.M. (1989) “What determines the rate of growth and technical change?”, World Bank Research Working paper, 279.
  • Saaed, A.A.J. ve Hussain, M.A. (2015) “The Causal Relationship among Trade Openness, Financial Development and Economic Growth: Evidence from Kuwait”, Journal of Emerging Issues in Economics, Finance and Banking, 4(1), 1385-1413.
  • Sehrawat, M. ve Giri A.K. (2017) “Financial Structure, Interest Rate, Trade Openness and Growth: Time Series Analysis of Indian Economy”, Global Business Review, 18(5), 1278–1290.
  • Sharma, S., ve Dhakal. D. (1994) "Causal Analyses Between Exports and Economic Growth in Developing Countries", Applied Economics, 26(12), 1145-1157.
  • Svaleryd, H., ve Vlachos, J. (2002) “Markets for Risk and Openness to Trade: How Are They Related?”, Journal of International Economics, 57, 369-395.
  • Türedi, S. ve Berber, M. (2010) “Finansal Kalkınma, Ticari Açıklık ve Ekonomik Büyüme Arasındaki İlişki: Türkiye Üzerine Bir Analiz”, Erciyes Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 35, 301-316.
There are 33 citations in total.

Details

Primary Language Turkish
Journal Section Articles
Authors

Bilge Canbaloğlu 0000-0001-6352-0079

Gözde Gürgün 0000-0001-8844-1430

Publication Date March 1, 2019
Published in Issue Year 2019 Volume: 17 Issue: 1

Cite

APA Canbaloğlu, B., & Gürgün, G. (2019). FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ. Journal of Management and Economics Research, 17(1), 441-457. https://doi.org/10.11611/yead.423374
AMA Canbaloğlu B, Gürgün G. FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ. Journal of Management and Economics Research. March 2019;17(1):441-457. doi:10.11611/yead.423374
Chicago Canbaloğlu, Bilge, and Gözde Gürgün. “FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ”. Journal of Management and Economics Research 17, no. 1 (March 2019): 441-57. https://doi.org/10.11611/yead.423374.
EndNote Canbaloğlu B, Gürgün G (March 1, 2019) FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ. Journal of Management and Economics Research 17 1 441–457.
IEEE B. Canbaloğlu and G. Gürgün, “FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ”, Journal of Management and Economics Research, vol. 17, no. 1, pp. 441–457, 2019, doi: 10.11611/yead.423374.
ISNAD Canbaloğlu, Bilge - Gürgün, Gözde. “FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ”. Journal of Management and Economics Research 17/1 (March 2019), 441-457. https://doi.org/10.11611/yead.423374.
JAMA Canbaloğlu B, Gürgün G. FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ. Journal of Management and Economics Research. 2019;17:441–457.
MLA Canbaloğlu, Bilge and Gözde Gürgün. “FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ”. Journal of Management and Economics Research, vol. 17, no. 1, 2019, pp. 441-57, doi:10.11611/yead.423374.
Vancouver Canbaloğlu B, Gürgün G. FİNANSAL SEKTÖR GELİŞİMİ, TİCARİ AÇIKLIK VE EKONOMİK BÜYÜME İLİŞKİSİ: YÜKSELEN PİYASA VE GELİŞMEKTE OLAN EKONOMİLER PANEL-VAR ÖRNEĞİ. Journal of Management and Economics Research. 2019;17(1):441-57.