Financial Development And Economic Growth In Algeria :An Empirical Study

Abstract

This paper explores the relationship between financial development and economic growth in Algeria over the period of 1995-2021, using the ARDL model. The study found a significant negative error correction coefficient (-0.771548), indicating a long-run cointegration between financial determinants and economic growth. Specifically, the research shows that financial intermediation efficiency has a negative effect of 1.364 and financial depth has a negative effect of 0.7014 on economic growth. Inefficient financial services may lead to reduced loan funding and credit limits, which can impede the ability of individuals and companies to achieve economic growth. On the other hand, financial intermediation has a positive effect of 0.3797 on economic growth due to factors such as increased investment and innovation, better fund distribution, reduced credit costs, and improved access to financing. Therefore, promoting and developing financial intermediation is crucial for enhancing economic growth.