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Causal Relationship between Economic Growth, Financial Deepening, Foreign Direct Investment and Innovation: Evidence from China

Author

Listed:
  • Mollah Aminul Islam
  • Haiyun Liu
  • Muhammad Asif Khan
  • Sultanuzzaman MD Reza
  • Yassin Elshain Yahia
  • Layla Nasrin

Abstract

This research examines the cointegration and causal relationship between economic growth, financial deepening, foreign direct investment and innovation in the context of China. The empirical results of the ARDL Bounds test to cointegration and VECM Granger causality validate the cointegration and causal association among variables. The study offers policy implication to bring more depth to the financial system to elevate potential innovative environment through FDI. Moreover, to boost real growth through the creation of spillover effects and to enrich the absorptive capacity, the policymakers need to pay attention to financial institutions access, depth and efficiency.

Suggested Citation

  • Mollah Aminul Islam & Haiyun Liu & Muhammad Asif Khan & Sultanuzzaman MD Reza & Yassin Elshain Yahia & Layla Nasrin, 2018. "Causal Relationship between Economic Growth, Financial Deepening, Foreign Direct Investment and Innovation: Evidence from China," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(8), pages 1086-1101.
    • Handle: RePEc:asi:aeafrj:v:8:y:2018:i:8:p:1086-1101:id:1730
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    Citations

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    Cited by:

    1. Mollah Aminul Islam & Md Nahin Hossain & Muhammad Asif Khan & Mohammad Raihanul Hasan & Md Riad Hassan, 2021. "Financial development and foreign direct investment nexus: A systematic review of literature," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(4), pages 226-238, June.
    2. Hongzhong Fan & Md Ismail Hossain & Mollah Aminul Islam & Yassin Elshain Yahia, 2019. "The Impact of Trade, Technology and Growth on Environmental Deterioration of China and India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(1), pages 1-29, January.
    3. Yassin Elshain Yahia & Haiyun Liu & Abdalla Sirag & Sayyed Sadaqat Hussain Shah, 2020. "The Impacts of Intra-Trade on Industrialization: Evidence from COMESA," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(2), pages 75-101, June.
    4. Liu, Haiyun & Islam, Mollah Aminul & Khan, Muhammad Asif & Hossain, Md Ismail & Pervaiz, Khansa, 2020. "Does financial deepening attract foreign direct investment? Fresh evidence from panel threshold analysis," Research in International Business and Finance, Elsevier, vol. 53(C).
    5. Islam, Mollah Aminul & Liu, Haiyun & Khan, Muhammad Asif & Islam, Md Tariqul & Sultanuzzaman, Md Reza, 2021. "Does foreign direct investment deepen the financial system in Southeast Asian economies?," Journal of Multinational Financial Management, Elsevier, vol. 61(C).
    6. Mollah Aminul Islam & Muhammad Asif Khan & József Popp & Wlodzimierz Sroka & Judit Oláh, 2020. "Financial Development and Foreign Direct Investment—The Moderating Role of Quality Institutions," Sustainability, MDPI, vol. 12(9), pages 1-22, April.
    7. Yapatake Kossele Thales Pacific & Ngaba Mbai-Akem Gabriella Magalie, 2023. "One Bad Turn Deserves Another: How Energy Production, Financial Instability, and Political Governance Crisis Sustain the Decline of FDI Inflows in the Central African Republic," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 831-853, June.

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