Financial sector development and economic growth in Algeria : an ARDL bounds testing approach 1980-2017

Abstract EN

This study empirically examines the relationship between financial sector development and economic growth in Algeria over the period 1980–2017 using the auto-regressive distributed lag approach to co-integration analysis, depending on real gross domestic product per capita as a dependent variable, broad money and domestic credit to private sector as a measure of financial development.

Our results reveal that the relationship between financial development and economic growth in Algeria is not significantly different from what has been observed generally in oil-dependent economies.

The finance-growth relation in Algeria is found to be insignificantly positive.

These findings suggest a dire need for financial reforms in Algeria in order to improve efficiency in the financial sector so as to stimulate investment and saving and thus, long-term economic growth.