Banking Sector Development and Economic Growth in OECD Countries: Panel VAR Evidence.

The paper examines the causality relationship between banking sector development (BSD) and economic growth (GDP) by using panel VAR model. Using data from selected 34 OECD countries, the study finds Granger causality between BSD and GDP. The paper suggests that banking sector indicators can be considered as the policy variable to accelerate economic growth in OECD countries. The policy implication of this study is that the economic policies should recognize the differences in the banking sector developmentgrowth nexus in order to maintain sustainable economic growth in the region. [ABSTRACT FROM AUTHOR]