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The Causal Relationship between Stock, Credit Market and Economic Development: An Empirical Evidence for Greece

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Abstract

This paper examines empirically the causal relationship among financial development, credit market and economic growth by using a trivariate autoregressive VAR model in Greece for the examined period 1988:1–2002:12. The results of cointegration analysis suggested that there is one cointegrated vector among the functions of stock market, the banking sector development and economic growth. Granger causality tests have shown that there is a bilateral causal relationship between banking sector development and economic growth and a unidirectional causality between economic growth and stock market development whereas there is no causal relationship between the stock market and banking sector development.

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Authors and Affiliations

  1. Department of Applied Informatics, University of Macedonia, 156 Egnatia str., 54006, Thessaloniki, Greece

    Chaido Dritsaki & Melina Dritsaki-Bargiota

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  1. Chaido Dritsaki
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  2. Melina Dritsaki-Bargiota
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Correspondence to Chaido Dritsaki.

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Dritsaki, C., Dritsaki-Bargiota, M. The Causal Relationship between Stock, Credit Market and Economic Development: An Empirical Evidence for Greece. Econ Change 38, 113–127 (2005). https://doi.org/10.1007/s10644-005-4525-3

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  • DOI: https://doi.org/10.1007/s10644-005-4525-3

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