This article investigates short-run as well as long-run relationships, and also causality relationships between banking sector development and the economic growth of India for which empirical analysis is performed using annual data. We use a new data set of banking sector development indicators to argue that banking sector development substantially affected economic growth. We find strong evidence that banking sector development caused economic growth in the Indian economy, especially in the period between 1960 and 2011, covering 52 years of the post-independence period for India.
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