Abstract
This research paper represents a brief summary of both the theoretical and theempirical frameworks of the most important researches related to the study of therelationship between financial development and economic growth. A standard study wasconducted to investigated the nature of the relationship and to determine the role of theAlgerian banking system in promoting the economic activity during the period (1990 –2014) relying on a set of tests, including the test of cointegration of variables, and vectorerror-correction model. In addition to Granger’s causality, using only the financialvariables, and then applying the model using macro variables (financial and realvariables) as to identify the most influential factors on economic growth .The study concluded that there is a one-way long-term causal relationship betweenbanking system and economic growth. While the Granger’s causality test indicates a onewaycausal relationship between economic growth and investments.
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