FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH OF UNITED KINGDOM

Abstract

When the country's financial system grows properly, it encourages innovations in technology by individuals capable of production. The relationship between finance and economic growth is not strange in the economics literature. This study examined the impact of financial development on economic growth in the United Kingdom during the period 1960-2015. The current study used the Johansen's co-integration test and concluded that development has a positive impact on economic growth. These results apply in the long term. The long-term impact supports the financial development factor. This is statistically significant and positive. (The investment gross fixed capital formation), which is of great statistical importance but is negative. Several other studies have shown a negative correlation between financial development and the economy. The amount of credit from domestic sources to the private sector has been shown to maintain a significant positive correlation with the growth of the economy through long-term periods, while gross fixed capital formation has reversed the long-term trend.