Analysis of the Relationship Between Financial Development and Economic Growth for the Fragile Five Countries

Developments in the financial market are important for the development of an economy. By developments in the financial markets, it is known as the relationship between the volume of global production and the increase in trade . However, the relationship between financial development and economic growth has been discussed for a long time, as the relationship between these factors cannot be determined precisely. Studies in the literature have shown that there is a relationship of different direction between financial development and economic growth. There are four types of approaches in the that financial development causes economic growth, economic growth leads to financial development, interrelation and lack of relationship. In this study, the relationship between financial development and economic growth in the fragile five countries was investigated by Westerlund co-integration method for the years 1992-2016. The results show a long-term relationship between financial development and economic growth. Moreover, according to panel co-integration coefficients obtained by DOLS and FMOLS estimators, a positive and significant relationship was found between financial development and economic growth in the long-run