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Alkhuzaim (2014) used cointegration and granger causality techniques and concluded that there is positive long run relationship between financial development indicators and GDP growth rate in Qatar.
The long- run relationship between financial development and economic growth in this study is in collaboration with the works of Mandiefe (2015) which shows that improvement in the financial sector consistently mitigates investment and therefore boosts growth in an economy.
This might imply that the long-run relationship is weak.
It means that the long-run relationship exists.
In addition, both the short- and the long-run relationship can be simultaneously estimated.
It is clear from the table that there is a long run relationship amongst the variables.
Thus, long-run relationship will often hold "on average" over time [2].
μ 1 ≠ μ 2 ≠0 (a long-run relationship exists thus co-integration).
Cointegration among variables reflects the presence of a long-run relationship in the system.
Hence, we estimated the long-run relationship by using the Pedroni panel co-integration method.
This therefore means there is a long run relationship between financial development and economic growth.
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