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Exploring the Complementary and Nonlinear Effects of Financial Development and ICT on Inclusive Growth in South Asia

Author

Listed:
  • Laila Khalid

    (Department of Economics and Quantitative Methods (HSM), University of Management and Technology, Lahore, Pakistan)

  • Farhat Rasul

    (Department of Economics and Quantitative Methods (HSM), University of Management and Technology, Lahore, Pakistan)

  • Nabila Asghar

    (��Department of Economics, University of Education, Lahore, Pakistan)

Abstract

The current research aims to examine the dynamics among financial development, renewable energy consumption, information and communication technology (ICT) and inclusive growth by focusing on the interaction of finance and ICT in South Asia from 1995 to 2019. The objectives of the study are obtained by using new and broad measures for inclusive growth and financial development. The panel co-integration tests confirm the long-run association between the selected variables. The existence of cross-sectional dependence and mixed order of integration of analyzed variables require the application of panel linear and nonlinear autoregressive distributed lag (ARDL). The findings of both techniques disclose that financial development and ICT individually are significant and vital contributors to inclusive growth in the long run. While their collaboration does not supplement inclusive growth during the same period which is an interesting and unique finding. The short-run outcomes also endorse this outcome. However, the individual impact of financial development remains insignificant while ICT enhances inclusive growth significantly in the short run. The panel nonlinear autoregressive distributed lag (NARDL) results have more explanatory powers than panel ARDL and endorse the assumptions of significant complementarity and nonlinearity between financial development-ICT and inclusive growth. Therefore, it is suggested to increase the access and efficiency of financial intermediaries to accelerate the participation of the masses in the economic growth process and its benefits. In addition, more investment in ICT infrastructure and education is needed so that the ICT sector can complement the financial sector efficiently to boost inclusive growth in South Asia.

Suggested Citation

  • Laila Khalid & Farhat Rasul & Nabila Asghar, 2023. "Exploring the Complementary and Nonlinear Effects of Financial Development and ICT on Inclusive Growth in South Asia," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-22, December.
    • Handle: RePEc:wsi:afexxx:v:18:y:2023:i:04:n:s2010495223500136
    DOI: 10.1142/S2010495223500136
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    More about this item

    Keywords

    NARDL; internet; multidimensional inclusiveness index; renewable energy consumption; financial intermediaries;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G2 - Financial Economics - - Financial Institutions and Services
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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