The Nexus of Economic Growth, Trade Openness and Banking Sector Depth In OIC: An Application of Panel Data Analysis

Authors : İsmail DURAK, Ergün EROĞLU

Pages : 205-238

Doi:10.17093/alphanumeric.640213

View : 23 | Download : 8

Publication Date : 2019-12-31

Article Type : Research Paper

Abstract :This article is investigated the connections between economic growth, trade openness and banking sector depth, using a panel data set including seventeen countries in the Islamic Cooperation Organization insert ignore into journalissuearticles values(OIC);, where participation and conventional banking co-exist, for the period 1990–2016. Using a multivariate framework, It is primarily found that all the variables are not integrated of order one insert ignore into journalissuearticles values(I);. Since the series are not stationary, cross-dependence tests and Westerlund insert ignore into journalissuearticles values(2007); cointegration analysis are performed to the series and it is determined that the series are cross-dependent and cointegrated. Then, the models are estimated with three estimators by writing the panel as panel ARDL model to determine the long-term and short-term relations. The results of the study indicate a general long-run equilibrium connection between economic growth, trade openness and banking sector depth as well as a short-run connection among these variables. Policy suggestions include those that will increase greater banking sector depth as well as promoted trade openness.
Keywords : Economic Growth, Trade Openness, Banking Sector Depth, Panel Data, Participation Banking