relationship between regional financial development and economic growth (analysis based on panel data)

development of financial markets as an important factor in the economic growth process always has been of interest to economists. the purpose of this paper is to study the relationship between regional financial development and economic growth. this study uses provincial annual data over the period 2000-2011 by using panel data technique. the panel co integration techniques have been used to test and estimate the long-run equilibrium relationship between real gdp and the financial development indicators. the results show that long-run positive relationship exists between the variables of insurance, banking and stock with economic growth. there is no short- run causality from stock market to banking sector, but there is bidirectional causality between other variables in the short run and long run. in the long-run, volatility of gdp mainly described by the impulse of gdp (59.7%), stock (29.74%) and little amount (0.5%) by bank ing development.