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The Relationship Between Financial Development and Economic Growth In Iran: Using Factor Analysis Method
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Mohammad Hasan Fotros *   , Abolfazl Najarzadeh , Hossein Mahmoodi |
| , fotros@basu.ac.ir |
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Abstract: (24448 Views) |
| This paper investigates the long run relationship between financial development and economic growth since 1340 to 1385. Firstly, we study diverse instruments of Iranian financial system. Then, we define 8 indices extracted from banking system to represent indicator of financial development. Furthermore, we transform the indexes of financial development into a unique and comprehensive index by using factor analysis method. We estimate relationship between these variables an assess causality relationship by means of Granger Causality Test. Our findings show: (a) there is a direct relationship between financial development and economic growth in Iran and (b) the direction of causality is from economic growth to financial development. |
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| Keywords: Financial Development, Economic Growth, Endogenous Growth Models, Factor Analysis Method, Banking System of Iran |
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Full-Text [PDF 391 kb]
(8140 Downloads)
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Type of Study: Research |
Subject:
General
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