The Relationship Between Economic Development, Banking Sector Performance and Financial Globalization: Evidence from OECD Countries

Authors : Sevgi Sümerli Sarıgül, Pınar Avcı

Pages : 1-18

Doi:10.17336/igusbd.1166058

View : 89 | Download : 64

Publication Date : 2024-05-17

Article Type : Research Paper

Abstract :The aim of this study is to examine the relationship between the economic development of the 11 OECD countries selected in the period 1990-2018, banking sector performance and financial globalization by integrating investments and trade openness as explanatory variables. The cointegration between variables is investigated by Pedroni, Kao and Westerlund tests and the long-term coefficients are determined by Driscoll-Kraay standard errors forecasters. Finally, the causality relationship between variables is tested in the Dumitrescu-Hurlin panel bootstrap approach. Empirical findings indicate the existence of cointegration between variables. The banking sector performance, financial globalization and investments have a statistically significant positive effect on economic development, while the trade openness has a meaninglessly positive effect. They also indicate a two-way causality between the economic development and banking sector performance and investments, and a one-way causality running from trade openness to economic development. Therefore, the findings make political recommendations for both policymakers and future studies.
Keywords : Bankacılık Sektör Gelişimi, Ekonomik Gelişme, Finansal Küreselleşme, Panel Veri, Driscoll Kraay