Subject. This article examines the relationship between financial development and economic growth in the Russian Federation using data for 2003–2023. Objectives. The article aims to establish a causal relationship between financial development and economic growth indicators. Methods. For the study, we used the autoregressive distributed lag model (ARDL), error correction model (ECM), and the Granger causality. Results. Based on the cointegration bounds test, the article finds that there is a relationship between the described variables. Conclusions and Relevance. The proposed approach to establishing a causal relationship based on the ARDL and ECM methods shows the possibility of obtaining reliable results. The impact of financial development on economic growth is significant. Financial development will play a more significant role in the overall economic indicators of the country in the future and the nature of the relationship with GDP must be taken into account. The results obtained can be useful when planning indicators of the size and structure of the financial sector.
Keywords: finance, development, economy, growth, cointegration, model
References:
Engle R.F., Granger C.W. Co-integration and error correction: Representation, estimation, and testing. Econometrica, 1987, vol. 55, no. 2, pp. 251–276. DOI: 10.2307/1913236
Johansen S. Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control, 1988, vol. 12, iss. 2-3, pp. 231–254. DOI: 10.1016/0165-1889(88)90041-3
Pesaran M.H., Shin Y., Smith R.J. Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 2001, vol. 16, iss. 3, pp. 289–326. DOI: 10.1002/JAE.616 EDN: FNJCBH
Ewane B.E. Financial Development and Economic Growth in Cameroon: An ARDL Bound Test and Multivariate Granger Causality Framework. Journal of Quantitative Finance and Economics, 2023, vol. 5, no. 1, pp. 25–48. DOI: 10.47509/JQFE.2023.v05i01.02
Hewage R.S., Pyeman J., Othman N. et al. An Overview on the Relationship Between Financial Development and Economic Growth. Review of Business and Finance Studies, 2022, vol. 13, no. 1, pp. 63–77.
Pradhan R.P., Arvin M.B., Nair M., Bennett S.E. Unveiling the causal relationships among banking competition, stock and insurance market development, and economic growth in Europe. Structural Change and Economic Dynamics, 2020, vol. 55, pp. 74–87. DOI: 10.1016/j.strueco.2020.08.006
Udemezue N.N., Nneli C.A., Aleke S.F., Okeke F.C. Evaluating Sustainable Relationship between Stock Market Development and Nigeria Economic Growth. International Journal of Research and Innovation in Social Science, 2024, vol. 8, iss. 1, pp. 2449–2470.
Cavallaro E., Villani I. Beyond financial deepening: Rethinking the finance-growth relationship in an uneven world. Economic Modelling, 2022, vol. 116, 106009. DOI: 10.1016/j.econmod.2022.106009
Krinichanskii K.V., Yurevich M.A. [Finance and Growth: Nonlinearity and Structural Shifts]. Prikladnaya ekonometrika, 2023, no. 4, pp. 6–23. (In Russ.) DOI: 10.22394/1993-7601-2023-72-5-22 EDN: MFMAMC
Novikov A.V., Novikova I.Ya. [Financial Development and Economic Growth: An Analysis of Approaches to the Problem]. Idei i ideal, 2020, vol. 12, no. 4-2, pp. 251–266. (In Russ.) DOI: 10.17212/2075-0862-2020-12.4.2-251-266 EDN: SVHIMZ
Smolo E. Institutions-Finance-Growth Nexus: The Case Study of EU and European Transition Economies. Journal of Economics Law and Society, 2024, vol. 1, no. 1, pp. 5–22. DOI: 10.70009/jels.2024.1.1.1
Mtar K., Belazreg W. Causal Nexus Between Innovation, Financial Development, and Economic Growth: The Case of OECD Countries. Journal of the Knowledge Economy, 2021, vol. 12, iss. 1, pp. 310–341.
Somuncu K. The Relationship Between Financial Inclusion and Real Economic Growth: Examples from Turkey, Developing Countries, Developed Countries, and the World. Yönetim Bilimleri Dergisi, 2025, vol. 23, pp. 310–335. DOI: 10.35408/comuybd.1516794
Okuyan H.A. The Nexus of Financial Development and Economic Growth Across Developing Economies. South East European Journal of Economics and Business, 2022, vol. 17, iss. 1, pp. 125–140. DOI: 10.2478/jeb-2022-0009
Zardoub A. Exploring the links between financial flows and economic growth: a panel ARDL approach. PSU Research Review: An International Journal, 2023, vol. 7, iss. 2, pp. 90–104. DOI: 10.1108/PRR-05-2020-0016 EDN: SATALY
Vandana S.S. Effect of Financial Development and Foreign Direct Investments on Economic Growth in SAARC Countries: A Panel ARDL Approach. Asian journal of management studies, 2022, vol. 2, iss. 1, pp. 72–97. DOI: 10.4038/ajms.v2i1.44
Hidthiir M.H.B., Ahmad Z., Junoh M.Z.M., Yusof M.F.B. Dynamics of economic growth in ASEAN-5 countries: a panel ARDL approach. Discover Sustainability, 2024, vol. 5. DOI: 10.1007/s43621-024-00351-x
Korankye B., Wen X., Appiah M., Antwi L. The Nexus Between Financial Development, Economic Growth, and Poverty Alleviation: PMG-ARDL Estimation. Etikonomi: Jurnal Ekonomi, 2021, vol. 20, no. 1, pp. 1–12. DOI: 10.15408/etk.v20i1.15908 EDN: HSZMFX
Aldaarmi A.A.A. The Short- and Long-Term Effects of Financial Sector Development on Economic Growth in Saudi Arabia: An ARDL Model Analysis. International Journal of Economics and Finance, 2021, vol. 13, no. 9. DOI: 10.5539/ijef.v13n9p25
Salmanov O.N., Babina N.V. [Analysis of the relationship between stock prices and macroeconomic variables]. Finansovyi biznes, 2024, no. 5, pp. 236–241. (In Russ.) EDN: QAFEYQ
