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Finance and growth: Evidence from the ARF countries

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  • Pradhan, Rudra P.
  • Arvin, Mak B.
  • Bahmani, Sahar
  • Hall, John H.
  • Norman, Neville R.

Abstract

This paper examines the relationships between economic growth and four different types of financial development in ASEAN Regional Forum (ARF) countries over the period 1991–2011. Using principal component analysis (PCA) to construct development indices, and a panel vector auto-regressive model to test for Granger causalities, the study demonstrates unidirectional and bidirectional causality between the variables. The study enhances understanding of the interrelationship between the variables, combining different strands of the literature, and investigating countries previously neglected in this context. The paper recommends making banking more accessible to residents without bank accounts in ARF countries and promoting stock market development to facilitate access to investment capital in order to enhance economic growth.

Suggested Citation

  • Pradhan, Rudra P. & Arvin, Mak B. & Bahmani, Sahar & Hall, John H. & Norman, Neville R., 2017. "Finance and growth: Evidence from the ARF countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 136-148.
    • Handle: RePEc:eee:quaeco:v:66:y:2017:i:c:p:136-148
    DOI: 10.1016/j.qref.2017.01.011
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    More about this item

    Keywords

    Financial development; Economic growth; PCA; Granger causality; ARF countries;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

    Statistics

    Access and download statistics

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