Financial Development and Economic Growth among Arab Maghreb Countries: Dynamic Panel Model Analysis

Abstract

This paper examine the short and the long run elasticities and the link between financial development and economic growth in Arab Maghreb countries. Using credit to private sector, foreign direct investment and domestic savings as a proxy for financial development. The study adopts Generalised Method of Moments (GMM) technique with data from World Development Indicators (1970-2012).The results reveals positive relationship between financial development and economic growth. Also, reveals that improvement in financial indicators has the same impact on economic growth in both the long and the short-run.

Keywords: Arab Maghreb union, Economic growth, financial development