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Does Financial Development Leads Economic Growth? Evidence from Emerging Asian Markets

Author

Listed:
  • Hamna Nasir
  • Sadaf Majeed
  • Abdul Aleem

Abstract

The essential interlocks connecting financial development and economic growth improves financial progress and reduces transicition, knowledge and monitoring cost of financial business. The target of this manuscript is to assess the premise that “financial development leads economic growth”. The analysis is conducted by employing Time series information for three emerging Asian states; Korea, Philippines and Thailand. Information is obtained from WDI for the era of 1976-2015. Unit root test, Cointegration test, forecast variance decomposition and impulse response function analysis are employed to investigate correlations among variables in the Vector Auto Regression (VAR) structure and, consequently, varies from the further standard Granger causality approach. The analysis provides the support to the hypothesis for Korea and Thailand that “financial development leads to economic growth”. Financial development is not only a causative factor, but indeed, the main significant feature of economic growth. The financial sector gives benefit for the economic development as credit to non public sector to GDP ratio series are employed as the financial development indicator.

Suggested Citation

  • Hamna Nasir & Sadaf Majeed & Abdul Aleem, 2018. "Does Financial Development Leads Economic Growth? Evidence from Emerging Asian Markets," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(5), pages 599-617.
    • Handle: RePEc:asi:aeafrj:v:8:y:2018:i:5:p:599-617:id:1698
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    Citations

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    Cited by:

    1. Adeola Yahya Oyebowale & Noah Kofi Karley, 2018. "Investigating Finance-Growth Nexus: Further Evidence from Nigeria," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(9), pages 121-121, September.
    2. Gautam Negi & Himanshu Mishra, 2023. "Bank Credit And Sectoral Growth €“ Evidence From Indian States," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 31, pages 65-84, June.
    3. Yakubu Awudu Sare, 2021. "Threshold Effects of Financial Sector Development on International Trade in Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 515-541, January.
    4. Haiyuan Yin & Baifan Chen, 2021. "Hometown identity of financial officials, financial development and promotion of officials in China," Australian Economic Papers, Wiley Blackwell, vol. 60(3), pages 520-543, September.
    5. Adeola Y. Oyebowale, 2020. "Determinants of Bank Lending in Nigeria," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 12(3), pages 378-398, September.

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