Abstract
ABSTRACT This paper estimates the causal relationships between financial development and economic growth for selected Arab countries using cointegration, Granger causality, and the impulse response function techniques. The results indicate that, in the long run, it seems that financial development and real GDP growth are strongly linked. However, in the short-run, the linkage is weak as Granger causality tests and the impulse response functions indicate that causality between real GDP and financial development exists only in four cases. Moreover, for these few cases, there is no clear evidence that financial development affects or is affected by economic growth.
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