Financial Deregulation and Economic Growth in Algeria

Abstract: This research aims to study the relationship between financial deregulation indicators and economic growth in Algeria, relying on annual data for the period between 1995 and 2021 and using a Vector Error Correction Model (VECM). The study found the presence of a long-term cointegration relationship among the variables under investigation, with a positive effect of financial depth and financial intermediation on economic growth. However, in the long run, shocks in financial liberalization indicators negatively affected economic growth. These findings highlight the dual role of financial liberalization in fostering economic growth while also posing potential risks when subjected to unexpected financial shocks. Keywords: Economic Growth, Financial Deregulation, Financial Depth, Financial Intermediation, Algeria JEL Classification Number: F43, N27, O1