Is the Economic Growth of a Country Explained by the Banking System or the Capital Market? The ARDL Model Applied in the Analysis for Ecuador

This study tries to infer the existence or not of a long-term relationship between the economic growth of Ecuador in the period 2001-2016 and the financial system. Using the ARDL model, three representative variables of the financial intermediation market, and three of the capital market are included. The analysis concludes that despite the Ecuadorian capital market is in development, it is the one that has a positive influence on the country's economic growth in the short term. In contrast, in the long-term, this relationship becomes higher but negative. On the other hand, the financial intermediation market has a more significant presence in this economy, but it does not have a positive relationship in the short or long term. Extensive work on data and comparative Latin American economies are expected to be carried out from this work proposal.