Banks, Stock Market and Economic Growth: the case of Iran

The first paper empirically investigates the relationship between banks, stock market and economic growth emphasizing the transmission channels from financial development to growth in Iran using time series methodologies, namely Johansen s cointegration and Granger causality testing procedures in the context of Error Correction Models (ECM). The findings suggest that in our case study banks affect economic growth mainly through the capital accumulation channel. While, it appears that the stock market does cause growth only through the productivity channel.In contrast, the feedback effect, running causality from growth to finance, was found significant only for the stock market development. Generally, these results strongly support the supply leading view.