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An Empirical Analysis between Banking Sector Development and Growth Rate of GDP in Bangladesh

Author

Listed:
  • Nahid Ferdousi
  • Tuli Chakma
  • Md. Raseduzzaman

Abstract

The objective of this research is to investigate the impact of banking sector development on economic growth in Bangladesh over the year 1990-2011. In this research, we have used five different explanatory variables by incorporating multivariate linear regression model. To examine the assumptions of best linear unbiased estimator, we apply ordinary least square method (OLS). Durbin –Watson and Augmented –Dickey-Fuller test reveals that there is no autocorrelation among the disturbances and growth rate of GDP is stationary. Our empirical findings suggest that policy makers should adopt the cost effective policies in the banking sector to accelerate the economic growth in Bangladesh.

Suggested Citation

  • Nahid Ferdousi & Tuli Chakma & Md. Raseduzzaman, 2014. "An Empirical Analysis between Banking Sector Development and Growth Rate of GDP in Bangladesh," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 2(3), pages 94-113.
    • Handle: RePEc:rss:jnljfe:v2i3p1
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    References listed on IDEAS

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    1. Jokipii, Terhi & Monnin, Pierre, 2013. "The impact of banking sector stability on the real economy," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 1-16.
    2. Abraham Mwenda & Noah Mutoti, 2011. "Financial Sector Reforms, Bank Performance and Economic Growth: Evidence from Zambia," African Development Review, African Development Bank, vol. 23(1), pages 60-74.
    3. Stephen Cecchetti & Enisse Kharroubi, 2012. "Reassessing the impact of finance on growth," BIS Working Papers 381, Bank for International Settlements.
    4. Tafirenyika Sunde, 2012. "Financial sector development and economic growth nexus in South Africa," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 5(1), pages 64-75.
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