Revisiting the Finance-Growth Nexus: Further Evidence from Tunisia

Abstract

The aim of this paper is to analyze the relationship between financial development and economic growth in terms of intersectoral spillovers. The econometric investigations are performed using a dynamic theoretical framework consistent with Feder (1983). For this purpose, yearly national accounts data for Tunisia during the period 1972—2008 are exploited. One of the principal motivations of this investigation goes back to the fact that the issue of the role of financial factor in economic development in Tunisia is not adequately researched. This paper should be viewed as an attempt to fill this gap. The empirical estimations show significant externalities from the financial services industry to the real economy.

Keywords:

• Financial development
• two-sector growth model
• Tunisia
• time series models