Which is leader in MENA region? Economic growth or financial development

There are vast literature about the relationship between financial development and economic growth. In most studies, the positive relation is approved while in few advocate that there is no relation. The positive relation may be from financial development to growth or vice versa or two ways. In this paper, the Granger causality relationship between financial development and economic growth is studied by the dynamic panel GMMSYS approach and with two kinds of data, annual and five-non-overlappingdata in MENA countries as a group. Five different measures of financial deepening are used to capture the variety of different channels through which financial development can affect growth. Results imply that a strong bi-directional causality between financial development and economic growth, but the relation from economic growth to financial development is stronger than vice versa direction.