Causal relation between economic growth and domestic credit in the economic globalization: Evidence from the Hatemi-J's test

Abstract

This paper empirically examines causality relationship between economic growth and domestic credit in the economic globalization in 58 developed and developing countries over the period 1970–2010. We use the asymmetric Granger causality test that is based on modified Wald test statistics within bootstrapped critical values. We find a significant causality from domestic credit to economic growth only in seven developing countries. Furthermore, there is a unidirectional causality from economic growth to domestic credit in five developed and 10 developing economies.