Finance-growth nexus evidence from a GMM panel VAR approach

Abstract

In the context of the period following the 2011-2018 civil protests, this paper examines the dynamic endogenous relationship between finance and economic growth in a sample representing 12 MENA countries by adopting a GMM panel VAR approach. Chow test to check for structural changes during the study period. In addition, we use the Granger causality to determine the direction of causal influence of the relationship between variables. The results of the study gave evidence of a negative relationship between financing and economic growth for the period following the civil protests (2011- 2018), while the results did not indicate a relationship between economic growth and finance for the period preceding the protests 2000-2010).