Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach

Miloud Lacheheb; Peter Adamu; Seth Akutson

doi:doi:10.11648/j.ijefm.20130106.28

| Peer-Reviewed |

Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach

Miloud Lacheheb, Peter Adamu, Seth Akutson

Received: 4 December 2013 Accepted: Published: 20 January 2014

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

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.

DOI	10.11648/j.ijefm.20130106.28
Published in	International Journal of Economics, Finance and Management Sciences (Volume 1, Issue 6, December 2013)
Page(s)	400-405
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Openness, Financial Development, Economic Growth, Algeria, ARDL

References

[1]	Benamraoui, A. (2003), 'The effects of Globalization of Financial Services on Banking Industryand Stock Market: an Algerian Case Study', PhD thesis, University of Greenwich.
[2]	Brown, R, L.Durbin, J. and Evans,J, M.(1975),'Techniques for Testing the Constancy of Regression Relationships Over Time ',Journal of the Royal Statistical Society.Series B (Methodological), Vol. 37, No. 2, December, 149-192.
[3]	Calderon, C. and Liu, L. (2003),'The Direction of Causality between Financial Development and Economic Growth', Journal of Development Economics, Vol. 72, No.1, October, 321–334.
[4]	Demetriades, P. and Andrianova, S. (2004),'Finance and Growth: What We Know and What We Need TO Know In Financial Development and Growth: Explaining the Links', Palgrave Macmillan edited by Goodhart, C, A,E., October, 38-65.
[5]	Demirgüç-Kunt, A. andMaksimovic, V. (1998),'Law, Finance and Firm Growth', Journal of Finance, Vol. 53, No.6, December, 2107 – 2137.
[6]	Goodhart, C, A, E. (2004),'Financial Development and Growth: Explaining the Links. Palgrave Macmillan.
[7]	Greenwood, J. and Jovanovic, B. (1990),'Financial Development, Growth, and the Distribution of Income',Journal of Political Economy, Vol. 98, No. 5, Part 1, October, 1076-1107.
[8]	Grossman, G. Helpman, E. (1991),'Quality Ladders in the Theory of Growth', Review of Economic Studies, Vol. 58, No. 1, January, 43–61.
[9]	Halit, Y. (2003), 'Trade Openness and Economic Growth a Cross-Country Empirical Investigation', Journal of Development Economics, Vol. 72, No. 1, October, 57– 89.
[10]	Harrison, A.(1996),'Openness and Growth: a Time Series, Cross-Country Analysis for Developing Countries', Journal of Development Economics, Vol. 48, No. 2,March, 419– 447.
[11]	Jbili, A. Enders, K. and Treichel, V. (1997), 'Financial Reforms in Algeria, Morocco, and Tunisia: A Preliminary Assessment', IMF Working Paper, July, 97/81
[12]	Kabir, M, H. Benito, S. and Jung-Suk Y. (2011), 'Financial development and economic growth: New evidence from panel data', The Quarterly Review of Economics and Finance, Vol. 51, No. 1, February, 88-104
[13]	King, R, G.and Levine, R. (1993),'Finance and Growth: Shumpeter Might be Right', Quarterly Journal of Economics, Vol. 108, No. 3, August, 717–737.
[14]	Kremers, J, J,M. Ericson, N, R. and Dolado, J, J. (1992),'The Power of CointegrationTests',Oxford Bulletin of Economic Statistics,Vol. 54, June, 325–347.
[15]	Levine, R. (2003),'More on Finance and Growth: More Finance, More Growth?',Federal Reserve Bank of St. Louis Review, Vol. 85, July, 31–46.
[16]	Levine, R. (2004),'Finance and growth: Theory and evidence',National Bureau of Economic Research, No. 10766
[17]	Levine, R. (1997),'Financial development and economic growth: views and agenda. Journal of Economic Literature, Vol.35,No. 2, June, 688–726.
[18]	Matsuyama, K. (1991),'Agricultural Productivity, Comparative Advantage, and Economic Growth',National Bureau of Economic Research, Working Paper, January, No.3606.
[19]	Muhammad, S. (2012), 'Does trade openness affect long run growth? Cointegration, causality and forecast error variance decomposition tests for Pakistan', Economic Modelling, Vol. 29, No. 06, November, 2325–2339.
[20]	Muhsin, K. Şaban, N. and Hüseyin, A. (2011), 'Financial development and economic growth nexus in theMENA countries: Bootstrap panel granger causality analysis', Economic Modelling,Vol. 28,No. 1–2, January–March 2011, 685-693
[21]	Narayan, P.K., (2005). The saving and investment nexus for China: evidence from cointegration tests. Appl. Econ. 37, 1979–1990.
[22]	Pesaran, M,H. Shin, Y. and Smith, R, J. (2001). 'Bounds testing approaches to the analysis of level relationships', Journal of Applied Econometrics, Vol. 16, No 3, June, 289– 326.
[23]	Rajan, R, G. and Zingales, L. (1998),'Financial dependence and growth',The American Economic Review, Vol. 88, No 3, June, 559–586.
[24]	Rivera-Batiz, L, A. Romer, P,M. (1991), 'Economic Integration and Endogenous Growth'. Quarterly Journal of Economics, Vol. 106, No.2, May, 531– 555.
[25]	Rivera-Batiz, L,A. Romer, P,M. (1991), 'International Trade with Endogenous Technological Change', European Economic Review 35, 971–1001.Vol. 35, No. 4, May, 971-1001.
[26]	Romer, P,M.(1990),'Endogenous Technical Change', Journal of Political Economy,Vol. 98, No. 5, November, 71-103.
[27]	Selçuk, A. Erdal, D.(2005),'The Causal Relationship between Openness and Economic Growth: Evidencefrom Selected MENA Countries'. Economic Review, Vol. 16, N. 2, December, 77-84.
[28]	Wacziarg, R.Welch, K, H.(2003),'Trade Liberalization and Growth: New Evidence', National Bureau of Economic Research, Working Paper, December, 10152.
[29]	World Bank Database, 2010. Available from . [8 May 2013].

Cite This Article

Plain Text BibTeX RIS

APA Style

Miloud Lacheheb, Peter Adamu, Seth Akutson. (2014). Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach. International Journal of Economics, Finance and Management Sciences, 1(6), 400-405. https://doi.org/10.11648/j.ijefm.20130106.28

Copy | Download

ACS Style

Miloud Lacheheb; Peter Adamu; Seth Akutson. Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach. Int. J. Econ. Finance Manag. Sci. 2014, 1(6), 400-405. doi: 10.11648/j.ijefm.20130106.28

Copy | Download

AMA Style

Miloud Lacheheb, Peter Adamu, Seth Akutson. Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach. Int J Econ Finance Manag Sci. 2014;1(6):400-405. doi: 10.11648/j.ijefm.20130106.28

Copy | Download

@article{10.11648/j.ijefm.20130106.28,
  author = {Miloud Lacheheb and Peter Adamu and Seth Akutson},
  title = {Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {1},
  number = {6},
  pages = {400-405},
  doi = {10.11648/j.ijefm.20130106.28},
  url = {https://doi.org/10.11648/j.ijefm.20130106.28},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20130106.28},
  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.},
 year = {2014}
}

Copy | Download

TY  - JOUR
T1  - Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach
AU  - Miloud Lacheheb
AU  - Peter Adamu
AU  - Seth Akutson
Y1  - 2014/01/20
PY  - 2014
N1  - https://doi.org/10.11648/j.ijefm.20130106.28
DO  - 10.11648/j.ijefm.20130106.28
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 400
EP  - 405
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20130106.28
AB  - 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.
VL  - 1
IS  - 6
ER  -

Copy | Download

Author Information

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

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Miloud Lacheheb, Peter Adamu, Seth Akutson. (2014). Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach. International Journal of Economics, Finance and Management Sciences, 1(6), 400-405. https://doi.org/10.11648/j.ijefm.20130106.28

Copy | Download

ACS Style

Miloud Lacheheb; Peter Adamu; Seth Akutson. Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach. Int. J. Econ. Finance Manag. Sci. 2014, 1(6), 400-405. doi: 10.11648/j.ijefm.20130106.28

Copy | Download

AMA Style

Miloud Lacheheb, Peter Adamu, Seth Akutson. Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach. Int J Econ Finance Manag Sci. 2014;1(6):400-405. doi: 10.11648/j.ijefm.20130106.28

Copy | Download

@article{10.11648/j.ijefm.20130106.28,
  author = {Miloud Lacheheb and Peter Adamu and Seth Akutson},
  title = {Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {1},
  number = {6},
  pages = {400-405},
  doi = {10.11648/j.ijefm.20130106.28},
  url = {https://doi.org/10.11648/j.ijefm.20130106.28},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20130106.28},
  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.},
 year = {2014}
}

Copy | Download

TY  - JOUR
T1  - Openness, Financial Development and Economic Growth in Algeria: An ARDL Bound Testing Approach
AU  - Miloud Lacheheb
AU  - Peter Adamu
AU  - Seth Akutson
Y1  - 2014/01/20
PY  - 2014
N1  - https://doi.org/10.11648/j.ijefm.20130106.28
DO  - 10.11648/j.ijefm.20130106.28
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 400
EP  - 405
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20130106.28
AB  - 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.
VL  - 1
IS  - 6
ER  -

Copy | Download