Working Paper Series: Special Edition of 2016 to 2018 Interns

CAN FINANCIAL INNOVATION FOSTER ECONOMIC GROWTH IN THE EASTERN CARIBBEAN CURRENCY UNION (ECCU)?

Reyna Samuels 9

Abstract This paper investigates the relationship between financial innovation and economic growth in the ECCU over the period 2004-2016. Financial Innovation is an important research topic in modern economics. It speaks to the ongoing process where new financial products, services, procedures and institutions are created as a response to the continuously changing environment. The relationship is assessed from estimates of a Pooled OLS model and further, through the use of Granger Causality. The study limited financial innovation to payment systems based on the availability of data. The results revealed a positive causal relationship running from financial innovation to economic growth.

JEL classifications: F65, E20 Key words: Financial Development, Financial innovation and Economic Growth

9 The above mentioned author is a student at the University of the West Indies, Mona Campus who did an internship with the Research Department.

57