Does Economic Growth Promote Banking Sector Development In Algeria?

Résumé: This study seeks to reassess the relationship between economic growth and the development of the banking sector, represented by bank deposits and bank credit, in Algeria spanning from 1964 to 2021. Employing Johansen cointegration analysis, the study investigates the presence of a long-term relationship among these variables, while Granger causality analysis is utilized to explore the direction of causality. The findings indicate the absence of cointegration between economic growth and banking sector development, suggesting no long-term relationship between the two. Additionally, the Granger causality test reveals a one-way causality from the logarithm of economic growth to the logarithm of bank deposits and bank credit, indicating that an increase in gross domestic product leads to development in the banking sector. Therefore, the demand-following hypothesis holds true for Algeria.

Publié dans la revue: دراسات اقتصادية