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An empirical investigation of banking sector development and economic growth in a panel of selected SAARC countries

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  • Javed AHMED

    (COMSATS Institute of Information Technology, Abbottabad, Pakistan)

  • Malik Fahim BASHIR

    (COMSATS Institute of Information Technology, Abbottabad, Pakistan)

Abstract

This study examine the relationship between banking sector development and economic growth in South Asian Association for Regional Cooperation (SAARC) over the period of 1980-2013 by entailing ordinary least square (OLS), two stages least square (TSLS), and panel TSLS fixed-effect model. Key banking sector development variables include money and quasi money (RQM) and domestic credit to private sector by banks (PC) have a positive and statistically robust effect on economic growth in all models. The study concludes that no economy can develop without a substantial growth in the banking sector and it is important to have a sound and rigorous banking system for building a sustained economic growth. Therefore, the SAARC economies are suggested to focus on the development of the banking sector for their long run growth.

Suggested Citation

  • Javed AHMED & Malik Fahim BASHIR, 2016. "An empirical investigation of banking sector development and economic growth in a panel of selected SAARC countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(607), S), pages 65-72, Summer.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:2(607):p:65-72
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    References listed on IDEAS

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    Cited by:

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    3. Peter Nderitu GITHAIGA, 2019. "Foreign Remittances, Private Sector Investment and Banking Sector Development," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 3(2), pages 85-112.

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