Financial Development, Economic Growth and Inflation: Same paradigm?

Sanvi Avouyi-Dovi &Ano Kuhanathan


We investigate the links between financial development, inflation and economic growth for 84 countries over the period from 1980 to 2017. We establish a bi-directional causality between economic growth and financial development on one hand, and on the other, a strong link between financial development and inflation. Moreover, we show that financial markets development, inflation and economic growth are linked and the levels of income have a strong impact on the significance of the relations between these variables.