Financial Development and Economic Growth: Comparing OPEC and Non-OIL Developing Countries With using Generalized Method of Moments (GMM)

Capital market is one of the most important sectors of every economy. Economic growth can lead to capital market boom and development, on the other hand, achieving desired economic growth and development is impossible without efficient financial institution and suitable funding resources. In this study the relationship between financial development and economic growth in OPEC countries and non-oil-developing countries is investigated and compared. The survey is done by using the GMM estimator based on Dynamic panel data model within the years 1990-2004. The results of this estimation indicates that financial development in OPEC countries due to oil revenues and inefficiency of financial institutions in raising financial resources. has a negative effect on the economic growth of the OPEC countries. The effect of financial development on capital accumulation is also negative in these countries.