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An Empirical Study of Taiwan's 1978-2006 Financial Development, Export, Saving and Economic Growth

Author

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  • Vey Wang
  • Hai-Chun Yun
  • Lung-Sheng Lee

    (Providence University)

Abstract

Since 1978, Taiwan has implemented a series of financial liberalization-related policies, including exchange rate liberalization, interest rate liberalization, and financial and foreign exchange market liberalization. The question of whether there exists a causal relationship between financial development and economic growth has always been an important research topic for economists. Using quarterly data from 1978 to 2006, we employ the augmented Dickey-Fuller unit root test, the co-integration test, and the causality test of the vector error correction model to explore this relationship. Our study shows that economic growth and financial development/export/saving seem to have a mutual feedback influence in the long run.

Suggested Citation

  • Vey Wang & Hai-Chun Yun & Lung-Sheng Lee, 2012. "An Empirical Study of Taiwan's 1978-2006 Financial Development, Export, Saving and Economic Growth," The African Finance Journal, Africagrowth Institute, vol. 14(1), pages 87-101.
    • Handle: RePEc:afj:journl:v:14:y:2012:i:1:p:87-101
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    Keywords

    Financial development; Taiwan; Economic growth; Causality;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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