The relationship between financial system development and economic growth in the Egyptian economy

摘要: Over the recent decades, there have been extensive theoretical and empirical debates on relationship between finance growth. However, results are ambiguous vary according to measures of financial development; function form; estimation method; data frequency. Therefore, by using different time series techniques, this thesis investigated three aspects but, nevertheless, interrelated dimensions finance-growth nexus in developing countries and, particularly, case Egypt. Firstly, a Vector Error Correction Model (VECM) which banking sector stock market were modelled explicitly simultaneously, we causality direction development and economic The co-integrating vector showed that, rather than sector, was more conducive higher rate Moreover, the pattern whilst, long-run, consistent supported demand-following view, short-run, the causality provided mixed results. Secondly, based McKinnon’s complementary hypothesis, long-run short-run association liberalisation; interest behaviour; savings investment. On one hand, findings indicated that hypothesis did not hold Egypt the other led larger systems contributed positively savings; investment; economic financial liberalisation had an adverse effect investment. Finally, evaluated validity new structuralism highlighting dynamic country’s structure phase economic development. main confirmed hypothesis. Financial is determined endogenously demands from real economy for specific types services. Consequently, particular system structures exist effective others managing risk; matching with promoting efficient allocation resources; spurring growth at points stages development. In early development, both banks important. as advances, market’s importance, relative system, becomes significant. Accordingly, primary policy implication future policies should strengthen legal institutional environment. This would enhance operational efficiency capital resources. other Policy-makers should encourage policies repress demand money speculation activities. turn, these spur investment and the Furthermore, when designing appropriate policy, policy-makers take into consideration level real economy since certain institutions arrangements better serving industries.