Relationship between financial development and economic growth, panel data analysis of 22 developing countries

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: PANEL DATA ANALYSIS OF 22 DEVELOPING COUNTRIES BY TRẦN THỊ THU THỦY MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, October 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: PANEL DATA ANALYSIS OF 22 DEVELOPING COUNTRIES A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS BY TRAN THI THU THUY Academic supervisor Dr NGUYỄN MINH ĐỨC HO CHI MINH CITY, October 2014 i CERTIFICATION I hereby confirm that this thesis, namely “the Relationship between Financial Development and Economic Growth: a panel data analysis of 22 Developing countries” is my own work The work has not, in whole or part, been presented elsewhere for assessment Where material has been used from other sources it has been properly acknowledged and referenced If this statement is untrue I understand that I will have committed an assessment offence I have read the Regulations of Vietnam – Netherlands Programme for M.A In Development Economics and I am aware of the potential consequences of any breach of them Signature: Name: Trần Thị Thu Thủy Date: Ho Chi Minh City, October 2014 ii ACKNOWLEDGEMENT I would like to express my gratitude to Dr Nguyen Minh Duc, the academic supervisor, for his very carefully reading and editing of my thesis His valuable comments and suggestions help me to improve the quality of this thesis throughout my thesis stage Thank to his valuable lectures, guidance and encouragement, I can fully complete this thesis I also would like to extend my thanks to Dr Truong Dang Thuy, other professors, tutors and course co-instructors of Economics University who, through their valuable lectures, tutorials and advices, help me during the courses and my study process Finally, many special thanks and gratefulness are given to my family, my classmates of MDE course 18 and to a number of individuals for their encouragement in many ways that strongly support me during my thesis stage iii CONTENTS Certifications………………………………………………………………………………… i Acknowledment ii Contents……………………………………………………………………………………… iii List of tables………………………………………………………………………………… iv List of figures v Abstract……………………………………………………………………………………… vi CHAPTER 1: INTRODUCTION 1.1 Research problem 1.2 Research objectives and research questions 1.2.1 Research objectives 1.2.2 Research questions 1.3 Thesis Structure CHAPTER 2: LITERATURE REVIEW 2.1 Theoretical concepts related to economic growth and financial development 2.2 Financial development and economic growth: theoretical literatures 2.3 Literature review and empirical studies 19 2.3.1 Theoretical framework on the relationship between economic growth and financial development 19 2.3.2 Empirical studies on financial development and economic growth relationship 22 CHAPTER 3: METHODOLOGY 32 3.1 General methods 32 3.1.1 Conceptual framework for the study 32 3.1.2 Research hypotheses: 33 3.2 Research models and econometric methodology 36 3.3 Data 45 3.3.1 Determinants measuring financial development 46 3.3.2 Determinants measuring economic growth 47 3.4 Research process 50 CHAPTER 4: ESTIMATION RESULT ANALYSIS AND DISCUSSION 52 4.1 Brief information on the dataset 52 4.2 Regression results and discussion 55 4.2.1 Impact of economic growth on financial development 55 4.2.2 Impact of financial development on economic growth 59 CHAPTER 5: CONCLUSION AND IMPLICATION 64 5.1 Conclusion 64 5.2 Policy implications for Vietnam 66 5.2.1 An overview of the relationship between financial development and economic growth in Vietnam 66 5.2.2 Policy implications for Vietnam 73 5.3 Limitations and future research 75 5.3.1 Limitations 75 5.3.2 Suggestion for future research 76 APPENDIX Appendix A……………………………………………………………………………… 78 Appendix B……………………………………………………………………………….79 Appendix C……………………………………………………………………………….84 REFERENCES……………………………………………………………………….………95 iv LIST OF TABLES: Table 1: Summary of empirical studies………………………………………………….… 27 Table 2: Expected signs of variables………………………………………………………… 34 Table 3: Variable Description……………………………………………………………… 37 Table 4: Summary of Variables………………………………………………………………49 Table 5: Descriptive statistics and correlations for selected variables……………………… 53 Table 6: GMM estimation of Economic Growth and Financial Development………… ……56 Table 7: Regression Results of Economic Growth and Financial Development…………… 61 v LIST OF FIGURES Figure 1: The relationship between financial development and economic growth………………………………………………………………… 32 Figure 2: Diagram of the main results……………………………………………………… 66 Figure 3: Gross domestic savings in Vietnam and in Asean countries…………………………………………………………… 68 Figure 4: Annual GDP per capita in Vietnam and in Asean countries…………………………………………………………… 70 Figure 5: Gross domestic saving rates in Vietnam and in Asean countries………………….71 Figure 6: Annual growth of domestic credits in Vietnam…………………………………… 72 and in Asean countries Figure 7: Annual growth of Broad Money supply in Vietnam……………………………… 73 and Asean countries vi ABSTRACT: In recent years, many researchers have taken into account the causal connection between financial development and economic growth due to the important role of financial development in the process of achieving the higher economic growth To investigate the causal relationship between financial development and economic growth in twenty two developing countries in different regions from 1990 to 2011, we apply both Generalized method of moment with instrumental variable approach and Ordinary least square technique to examine how determinants of financial development impact on economic growth and how the determinants of economic growth contribute to develop finance system We find that there is a two-way positive impact between financial development and economic growth in selected developing countries We also find that the variable components such as the ratio of broad money to GDP, the ratio of credit offered by bank to private sector to GDP, the ratio of gross domestic savings to GDP and the ratio of domestic credit to the private sector to GDP play an important role in explaining financial development Furthermore, foreign direct investment, general government consumption and trade openness are important factors in accounting for growth rate of GDP per capita We find out that the EXPORT is significantly negative impact on economic growth This result is consistent with the argument that export specialization in developing countries may not benefit the economic growth Finally, taking the advantage of positive relationship between financial and economic development in developing countries, it is suggested that Vietnam needs to strengthen its financial system in the context of the integration into the world economy Vietnam should provide the right incentives to promote the financial sector that will enable it to have high economic growth Keywords: Financial development, growth, causal relationship CHAPTER 1: INTRODUCTION 1.1 Research problem In recent years, the causal relationship between financial development and economic growth has been attracting a lot of attentions in the economic literatures It is believed that financial development plays a significant role in the process of economic growth (Feng Lu & Yao, 2009; Fung, 2009; Fase & Abma, 2003; Ang & McKibbin, 2007; Calderón & Liu, 2003) The financial development enhances economic growth through capital allocation efficiency The capital allocation efficiency can be enhanced by performing the functions of financial intermediaries, including the improvement of risk management and the reduction of asymmetric information, as well as encouragement of saving and investment This leads to the result in the improvement in total factor productivity Therefore, a well-functioning financial system may foster economic growth (Hao, 2006; Odhiambo, 2004; Ghirmay, 2004) There are numerous empirical studies providing supportive evidences on positive linkage between financial development and economic growth (Fung, 2009; Anwar & Nguyen, 2011; Ang, 2009; Jalil & Feridun, 2011; Habibullah & Eng, 2006; Chen Hao, 2006; Khalifa Al-Yousif, 2002) For instance, the causal relationship between financial development and economic growth has been investigated by using Vector Auto Regression (VAR) approach for analyzing panel data of 109 industrial and developing countries for a period of 1960-1994 in the study of Calderón and Liu (2003) The authors found that financial development positively affects economic growth and economic growth positively affects financial development The authors also admitted that the financial development impacts on economic growth through channels of a rapid capital accumulation and productivity growth They further concluded that the impact of financial development on economic growth should be well recognized in providing the appropriate and meaningful implications for policy makers, which will Page APPENDIX C: REGRESSION RESULTS C.1 Declare data to be panel Xtset countrycode year panel variable: countrycode (strongly balanced) time variable: year, 1990 to 2011 delta: unit sort country year by country: gen GDPGRTHLAG1= gdpgrth[_n-1] by country: gen DOMCREDITLAG1 = domcreditgdp[_n-1] by country: gen EG= gdpgrth C.2 Regression results on the impact of Economic growth on financial development C.2.1 Testing for regressor endogeneity ivregress 2sls fd (EG = fdi gov DOMCREDITLAG1 grossdsa, robust trao GDPGRTHLAG1) Instrumental variables (2SLS) regression m2gdp bankcreditgdp Number of obs Wald chi2(5) Prob > chi2 R-squared Root MSE = 456 =68992.57 = 0.0000 = 0.9950 = 8.015 | Robust fd | Coef Std Err z P>|z| [95% Conf Interval] + -EG | 1.213075 4923588 2.46 0.014 2480697 2.178081 m2gdp | 986736 0517581 19.06 0.000 8852919 1.08818 bankcreditgdp | 1.243086 0493973 25.17 0.000 1.146269 1.339902 DOMCREDITLAG1 | 7242191 0684706 10.58 0.000 5900192 858419 grossdsa | 1.107113 0762243 14.52 0.000 9577161 1.25651 _cons | -7.619407 1.755328 -4.34 0.000 -11.05979 -4.179027 Instrumented: EG Instruments: m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa fdi gov trao GDPGRTHLAG1 estat endogenous Page 84 Tests of endogeneity Ho: variables are exogenous Robust score chi2(1) Robust regression F(1,449) = = 6.15632 7.24548 (p = 0.0131) (p = 0.0074) C.2.2 Testing for overidentifation ivregress 2sls fd (EG = fdi gov GDPGRTHLAG1) DOMCREDITLAG1 grossdsa, robust m2gdp bankcreditgdp Instrumental variables (2SLS) regression Number of obs Wald chi2(5) Prob > chi2 R-squared Root MSE = 456 =36762.73 = 0.0000 = 0.9913 = 10.537 | Robust fd | Coef Std Err z P>|z| [95% Conf Interval] + -EG | 2.481783 6477292 3.83 0.000 1.212257 3.751308 m2gdp | 9195533 0621771 14.79 0.000 7976885 1.041418 bankcreditgdp | 1.287596 0588551 21.88 0.000 1.172242 1.40295 DOMCREDITLAG1 | 7440606 0750161 9.92 0.000 5970318 8910893 grossdsa | 9914662 087724 11.30 0.000 8195303 1.163402 _cons | -10.48041 2.327741 -4.50 0.000 -15.0427 -5.91812 Instrumented: EG Instruments: m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa fdi gov GDPGRTHLAG1 estat overid Test of overidentifying restrictions: Score chi2(2) = 4.07701 (p = 0.1302) C.2.3 Testing for weak instruments reg fd robust fdi gov trao GDPGRTHLAG1 m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa , Linear regression Number of obs F( 8, 447) Prob > F R-squared Root MSE Page 85 = 456 =16438.58 = 0.0000 = 0.9966 = 6.6784 | Robust fd | Coef Std Err t P>|t| [95% Conf Interval] + -fdi | 2943362 0949583 3.10 0.002 107716 4809564 gov | -.0059817 108874 -0.05 0.956 -.2199503 2079868 trao | 0297118 0080789 3.68 0.000 0138345 0455891 GDPGRTHLAG1 | 6251163 1304802 4.79 0.000 3686855 8815471 m2gdp | 951685 0342987 27.75 0.000 8842783 1.019092 bankcreditgdp | 1.312666 0531455 24.70 0.000 1.20822 1.417112 DOMCREDITLAG1 | 6498787 0669155 9.71 0.000 5183707 7813868 grossdsa | 1.121969 0536756 20.90 0.000 1.016481 1.227457 _cons | -7.302614 2.127787 -3.43 0.001 -11.48432 -3.120906 test ( ( ( ( ( ( ( ( 1) 2) 3) 4) 5) 6) 7) 8) fdi gov trao GDPGRTHLAG1 m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa fdi = gov = trao = GDPGRTHLAG1 = m2gdp = bankcreditgdp = DOMCREDITLAG1 = grossdsa = F( 8, 447) =16438.58 Prob > F = 0.0000 C.2.4 Estimation Results ivreg fd m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa (EG = gov trao),robust Instrumental variables (2SLS) regression GDPGRTHLAG1 fdi Number of obs F( 5, 450) Prob > F R-squared Root MSE = 456 =13616.95 = 0.0000 = 0.9950 = 8.0682 | Robust fd | Coef Std Err t P>|t| [95% Conf Interval] + -EG | 1.213075 4956303 2.45 0.015 2390379 2.187113 m2gdp | 986736 052102 18.94 0.000 8843425 1.089129 bankcreditgdp | 1.243086 0497255 25.00 0.000 1.145363 1.340809 Page 86 DOMCREDITLAG1 | 7242191 0689256 10.51 0.000 5887631 859675 grossdsa | 1.107113 0767307 14.43 0.000 9563178 1.257908 _cons | -7.619407 1.766992 -4.31 0.000 -11.09199 -4.146827 Instrumented: EG Instruments: m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa GDPGRTHLAG1 fdi gov Trao - C.3 Regression result on the impact of financial development on economic growth C.3.1 Testing for regressor endogeneity ivregress 2sls EG (fd = m2gdp bankcreditgdp DOMCREDITLAG1 grossdsa) GDPGRTHLAG1 fdi gov trao, robust Instrumental variables (2SLS) regression Number of obs Wald chi2(5) Prob > chi2 R-squared Root MSE = = = = = 456 83.12 0.0000 0.1869 3.2614 -| Robust EG | Coef Std Err z P>|z| [95% Conf Interval] -+ -fd | 0040811 0020319 2.01 0.045 0000987 0080636 GDPGRTHLAG1 | 3093671 0550719 5.62 0.000 2014282 417306 fdi | 1554224 0507777 3.06 0.002 0558999 2549449 gov | -.075449 0440829 -1.71 0.087 -.1618499 010952 trao | -.0049284 0034018 -1.45 0.147 -.0115959 0017391 _cons | 3.205008 6247136 5.13 0.000 1.980592 4.429424 -Instrumented: fd Instruments: GDPGRTHLAG1 fdi gov trao m2gdp bankcreditgdp DOMCREDITLAG1 Grossdsa estat endogenous Tests of endogeneity Ho: variables are exogenous Robust score chi2(1) Robust regression F(1,449) = = 115595 113956 (p = 0.7339) (p = 0.7358) C.3.2 Testing for regressor correlation correlate domcreditgdp m2gdp grossdsa (obs=480) Page 87 bankcreditgdp DOMCREDITGDP M2GDP GROSSDSA DOMCREDITGDP 1.0000 M2GDP 0.8721 1.0000 GROSSDSA 0.6280 0.4844 1.0000 BANKCREDITGDP 0.9039 0.8747 0.4597 BANKCREDITGDP 1.0000 C.3.3 Testing for Multicollinearity: regress EG DOMCREDITLAG1 grossdsa m2gdp bankcreditgdp GDPGRTHLAG1 import export gov fdi Source | SS df MS Model | 2053.15614 228.12846 Residual | 3911.87494 446 8.77102005 -+ -Total | 5965.03108 455 13.1099584 Number of obs = Prob > F R-squared Adj R-squared Root MSE = = = = 456 0.0000 0.3442 0.3310 2.9616 EG | Coef Std Err t P>|t| [95% Conf Interval] + -DOMCREDITLAG1 | -.0177692 0117607 -1.51 0.132 -.0408823 005344 grossdsa | 2793218 030177 9.26 0.000 220015 3386286 m2gdp | 0361335 0099299 3.64 0.000 0166183 0556487 bankcreditgdp | -.032633 0111958 -2.91 0.004 -.0546361 -.0106299 GDPGRTHLAG1 | 0699924 0453035 1.54 0.123 -.0190425 1590273 import | 2211401 029143 7.59 0.000 1638654 2784147 export | -.2367382 0279527 -8.47 0.000 -.2916737 -.1818028 gov | 0332015 0458072 0.72 0.469 -.0568232 1232263 fdi | 1188958 0419837 2.83 0.005 0363853 2014063 _cons | -1.781428 8420761 -2.12 0.035 -3.436358 -.1264984 vif Variable | VIF 1/VIF -+ -export | 63.67 0.015707 import | 55.24 0.018104 bankcredit~p | 9.25 0.108144 DOMCREDITL~1 | 8.96 0.111591 m2gdp | 6.95 0.143946 grossdsa | 6.71 0.149062 fdi | 1.78 0.560986 gov | 1.62 0.616930 GDPGRTHLAG1 | 1.52 0.657963 -+ Page 88 Mean VIF | correlate 17.30 DOMCREDITLAG1 grossdsa m2gdp bankcreditgdp GDPGRTHLAG1 import export gov fdi (obs=456) DOMCREDITLAG1 grossdsa m2gdp DOMCREDITLAG1 GDPGRTHLAG1 import export DOMCREDITLAG1 0.621 0.8658 0.8882 0.1932 0.5022 0.5384 Grossdsa 0.494 0.4644 0.3022 0.4298 0.5829 0.1476 0.3551 -0.3595 0.261 gov fdi m2gdp DOMCREDITLAG1 GDPGRTHLAG1 0.8769 0.2588 0.5022 0.5039 0.1474 0.2871 0.3128 0.1642 0.1394 0.2286 0.37 0.2333 0.1803 -0.0673 0.2231 import 0.9715 0.0348 0.6257 export gov -0.126 0.5929 0.0828 C.3.4 Estimation Results C.3.4.1 We obtain the estimations with IMPORT and EXPORT variables C.3.4.1.1 Impact of Domcreditlag1 on economic growth regress EG DOMCREDITLAG1 import export gov fdi, robust cluster() Linear regression Number of obs F( 5, 451) Prob > F R-squared Root MSE = = = = = 457 11.83 0.0000 0.0983 3.4586 | Robust EG | Coef Std Err t P>|t| [95% Conf Interval] + -DOMCREDITLAG1 | 0215886 0079229 2.72 0.007 0060182 037159 import | 0557593 0229201 2.43 0.015 0107159 1008028 export | -.0627588 0194501 -3.23 0.001 -.1009828 -.0245347 gov | -.1669427 0416902 -4.00 0.000 -.2488739 -.0850115 fdi | 1988553 0528865 3.76 0.000 0949207 30279 _cons | 5.128257 563125 9.11 0.000 4.021582 6.234931 - C.3.4.1.2 Impact of Bankreditgdp on economic growth regress EG bankcreditgdp import export gov fdi, robust cluster() Linear regression Number of obs F( 5, 473) Prob > F R-squared Root MSE Page 89 fdi = = = = = 479 11.95 0.0000 0.0952 3.5668 | Robust EG | Coef Std Err t P>|t| [95% Conf Interval] + -bankcreditgdp | 012735 0060182 2.12 0.035 0009093 0245608 import | 0588954 0232444 2.53 0.012 0132203 1045705 export | -.0599913 0196989 -3.05 0.002 -.0986995 -.0212831 gov | -.1857124 0419999 -4.42 0.000 -.2682419 -.1031829 fdi | 2261025 0548844 4.12 0.000 1182552 3339499 _cons | 5.280728 5766067 9.16 0.000 4.147701 6.413756 - C.3.4.1.3 Impact of M2gdp on economic growth regress EG m2gdp import export gov fdi, robust cluster() Linear regression Number of obs F( 5, 473) Prob > F R-squared Root MSE = = = = = 479 15.63 0.0000 0.1288 3.4998 -| Robust EG | Coef Std Err t P>|t| [95% Conf Interval] -+ -m2gdp | 0272368 0054749 4.97 0.000 0164787 0379949 import | 0556597 0235526 2.36 0.019 009379 1019404 export | -.0655778 0203839 -3.22 0.001 -.1056319 -.0255237 gov | -.2230461 0427007 -5.22 0.000 -.3069526 -.1391396 fdi | 2100303 0535808 3.92 0.000 1047445 3153161 _cons | 5.292785 5731737 9.23 0.000 4.166503 6.419067 C.3.4.1.4 Impact of Grossdsa on economic growth regress EG grossdsa import export gov fdi, robust cluster() Linear regression Number of obs F( 5, 477) Prob > F R-squared Root MSE = = = = = 483 42.90 0.0000 0.2792 3.2194 -| Robust EG | Coef Std Err t P>|t| [95% Conf Interval] -+ -grossdsa | 2442982 0198374 12.32 0.000 2053188 2832777 import | 2429625 0290806 8.35 0.000 1858206 3001045 Page 90 export | -.2552888 0281521 -9.07 0.000 -.3106062 -.1999714 gov | -.0903438 0419474 -2.15 0.032 -.1727683 -.0079193 fdi | 1884616 0531684 3.54 0.000 0839883 2929349 _cons | -.2455744 7867414 -0.31 0.755 -1.791482 1.300333 C.3.4.2 We obtain the estimations without IMPORT and EXPORT variables C.3.4.2.1 Impact of Domcreditlag1 on economic growth regress EG DOMCREDITLAG1 gov fdi, robust cluster() Linear regression Number of obs = F( 3, 457 453) = 11.61 Prob > F = 0.0000 R-squared = 0.0742 Root MSE = 3.4966 | EG | Robust Coef Std Err t P>|t| [95% Conf Interval] + -DOMCREDITLAG1 | 0118288 0069407 1.70 0.089 -.0018112 0254689 gov | -.0878939 0431353 -2.04 0.042 -.1726639 -.0031238 fdi | 1673948 0379484 4.41 0.000 0928182 2419715 _cons | 4.532995 5437234 8.34 0.000 3.464462 5.601529 C.3.4.2.2 Impact of Bankreditgdp on economic growth regress EG bankcreditgdp gov fdi, robust cluster() Linear regression Number of obs = F( 3, 479 475) = 12.65 Prob > F = 0.0000 R-squared = 0.0762 Root MSE = 3.5964 | EG | Robust Coef Std Err t P>|t| [95% Conf Interval] + -bankcreditgdp | 0076401 0060274 1.27 Page 91 0.206 -.0042036 0194838 gov | -.1145634 0441579 -2.59 0.010 -.2013323 -.0277945 fdi | 2049703 0370357 5.53 0.000 1321962 2777444 _cons | 4.842479 5610337 8.63 0.000 3.740064 5.944893 C.3.4.2.3 Impact of M2gdp on economic growth regress EG m2gdp gov fdi, robust cluster() Linear regression Number of obs = F( 3, 479 475) = 15.92 Prob > F = 0.0000 R-squared = 0.0986 Root MSE = 3.5526 -| Robust EG | Coef Std Err t P>|t| [95% Conf Interval] -+ -m2gdp | 018739 005448 3.44 0.001 0080339 0294442 gov | -.135211 0430518 -3.14 0.002 -.2198065 -.0506155 fdi | 1598157 0377254 4.24 0.000 0856864 233945 _cons | 4.57462 5557799 8.23 0.000 3.482529 5.666711 C.3.4.2.4 Impact of Grossdsa on economic growth regress EG grossdsa gov fdi, robust cluster() Linear regression Number of obs = F( 3, 483 479) = 16.56 Prob > F = 0.0000 R-squared = 0.1146 Root MSE = 3.5605 -| EG | Robust Coef Std Err t P>|t| [95% Conf Interval] -+ -grossdsa | 0700373 0173748 4.03 0.000 035897 1041775 gov | -.0310961 0479203 -0.65 0.517 -.125256 0630639 Page 92 fdi | 1686506 0380042 4.44 0.000 0939749 2433262 _cons | 2.843549 7679072 3.70 0.000 1.334666 4.352432 Page 93 REFERENCES Anwar, S., & Nguyen, L P (2011) Financial development and economic 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DEVELOPMENT AND ECONOMIC GROWTH: PANEL DATA ANALYSIS OF 22 DEVELOPING COUNTRIES A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS... hereby confirm that this thesis, namely “the Relationship between Financial Development and Economic Growth: a panel data analysis of 22 Developing countries? ?? is my own work The work has not,... in developing countries (Masten et al., 2008) Investigating the two-way effect of financial development and economic growth, Calderón and Liu (2003) used panel data covering 109 developing and