Abstract
Abstract
Sound and efficient functioning of financial systems is critical to the economic prosperity of any economy. This paper investigates the tripartite relationship between financial sector output, employment and economic growth in North Cyprus. Using relevant time series data analysis (within the framework of structural breaks and VECM), we found that financial sector output in North Cyprus is sensitive to both internal and external shocks in that its economy is well linked with the global economy, in spite of the political isolation sustained since the bifurcation of Cyprus into North and South. The study further documents evidence of the neutrality hypothesis in the finance-growth nexus. The underlying variables were weakly connected in the short-run. However, economic growth responded to the short-run shocks and handled the equilibrating process of reverting to the long-run trend and thus, the demand following hypothesis is confirmed in the long-run.
Publisher
Springer Science and Business Media LLC
Subject
Management of Technology and Innovation,Finance
Reference37 articles.
1. Andronikou A (1979) Tourism in Cyprus. In: De Kadt (ed) Tourism: passport to development. Oxford University Press, New York, pp 237–264
2. Bai J, Perron P (1998) Estimating and Testing Linear Models with Multiple Structural Changes. Econometrica 66(1):47–78
3. Barkey HJ, Gordon PH (2001) Cyprus: The preditible crises, National Interest, 66:83–98
4. Baum C, Barkoulas J, Caglayan M (1999) Long memory or structural breaks: can either explain nonstationary exchange rates under the current float? J Int Finan Markets Inst Money 9:359–376
5. Caporale M, Rault C, Sova R, Sova A (2015) Financial development and economic growth: evidence from ten new European Union members. Int J Financ Econ 20:48–60.
https://doi.org/10.1002/ijfe.1498
Cited by
8 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献