The Stock Market Development, The Banking Sector Development and Economic Growth: The Case of Iran

ABSTRACT: This thesis investigates the empirical relationship between financial sector development and economic growth in Iran from 1967 through 2009. Results reveal that real income growth in Iran is in long run relationship with financial sector. Real income converges to its long term level by 18.73% speed of adjustment through financial sector. Finally, causality results suggest that in Iran “demand following” is driven; therefore, the hypothesis can be confirmed in the case of Iran. Keywords: financial sector; real income; causality; Iran. …………………………………………………………………………………………………………………………