The Impact of Financial Development Elements on Economic Growth on Gulf Cooperation Council (GCC)

Abstract

This study evaluates the effects of financial development factors and other important factors based on Solow's model over the economic growth in the Gulf Cooperation Council (GCC) countries. The panel data from 1986-2009 is used in this research. For analyzing the data, pooled OLS model, random effect model and fixed effect model are used by using E-views software. To distinguish between pooled OLS model and random effect model, LM test is run and to differentiate between random effect model and fixed effect model, the Hausman test is run. The results reveal that financial development which is measured by PRIVY is not significant in all the models that have been suggested. Nevertheless, the financial development, which is measured by the LLY, has a positive and significant sign in some of the models that have been offered.