Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach
International Journal of Economics, Finance and Management Sciences
Volume 1, Issue 6, December 2013, Pages: 400-405
Received: Dec. 4, 2013; Published: Jan. 20, 2014
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Authors
Miloud Lacheheb, Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia, UPM, Serdang, Selangor, Malaysia
Peter Adamu, Department of Economics, Faculty of Social and Management Sciences, Kaduna State University, Tafawa Balewa Way, Kaduna, Nigeria
Seth Akutson, Department of Economics, Faculty of Social and Management Sciences, Kaduna State University, Tafawa Balewa Way, Kaduna, Nigeria
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Abstract
This study examines the relationship between openness, financial development, and economic growth in Algeria using the autoregressive distributed lag (ARDL) cointegration framework. The results based on the bounds testing procedure confirm that a long-run relationship between openness, financial development, and economic growth exist. Data were obtained from the World Bank Development Indicators for the period of 1980 to 2010. Importantly, our results reveal that, openness has a significantly positive effect on economic growth. Broad money which is a proxy for financial development in this study is positive but insignificantly related to economic growth. Also, both labor force and gross capital formation are insignificant. These findings suggest a dire need for financial reforms in Algeria inorder to improve efficiency in the financial sector so as to stimulate saving/investment and thus, long-term economic growth.
Keywords
Openness, Financial Development, Economic Growth, Algeria, ARDL
To cite this article
Miloud Lacheheb, Peter Adamu, Seth Akutson, Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach, International Journal of Economics, Finance and Management Sciences. Vol. 1, No. 6, 2013, pp. 400-405. doi: 10.11648/j.ijefm.20130106.28
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