This study examines the sectoral credit-economic growth causal nexus in Australia using a wavelet coherence test between 1994Q4 and 2018Q4.For achieving this aim, the main sectors of agriculture, manufacture, and service are selected in the present study to test this causal nexus.Findings of time and frequency dynamic analysis reveal that economic growth causes credit for the agriculture sector in the long run.However, the results show that the causality is running from manufacturing sectoral credit to growth, and credit for the manufacturing sector causes economic growth.Moreover, there is a positive correlation between economic growth and credit for the service sector.Remarkably, the findings stress that the direction of sectoral credit-growth causality nexus varies and depends on the type of sector.To the best of our knowledge, this is the first study that conducts this nexus, and results have important policy implications for policymakers and the Australian government.
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