The effect of development in financial markets on economic growth: The case study of Georgi̇a

The relationship between financial markets development and economic growth is of great importance for underdeveloped and developing countries. For this reason, Breitung & Candelon (2006) frequency domain causality test and Pesaran et al. ARDL co-integration tests developed in 2001 were used. According to the results of the study, a long-term relationship was determined between the variables. According to the causality test results, the existence of a long-term causality relationship was determined between the economic growth and financial development indices. The direction of causality is the result that economic growth has a positive effect on productivity in financial markets. According to the results of co-integration analysis, it is concluded that financial development positively affects economic growth in the long run.