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Financial Structure, Interest Rate, Trade Openness and Growth: Time Series Analysis of Indian Economy

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  • Madhu Sehrawat
  • A. K. Giri

Abstract

The aim of this study is to construct a financial development index for Indian economy and to examine the impact of financial development index and trade openness on economic growth in India using annual data from 1982 to 2014. The results of autoregressive distributed lag (ARDL) approach to co-integration confirm the long-run relationship between financial development index, trade openness and economic growth in Indian economy. The results of Granger non-causality show that there is a unidirectional causality running from financial development to economic growth and bi-directional causality runs between economic growth and trade openness. The analysis of variance decomposition shows that influence of trade openness exerts the largest influence, whose steady contribution level for economic growth changes approaches to 15.48 per cent in India.

Suggested Citation

  • Madhu Sehrawat & A. K. Giri, 2017. "Financial Structure, Interest Rate, Trade Openness and Growth: Time Series Analysis of Indian Economy," Global Business Review, International Management Institute, vol. 18(5), pages 1278-1290, October.
    • Handle: RePEc:sae:globus:v:18:y:2017:i:5:p:1278-1290
    DOI: 10.1177/0972150917710150
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    3. K. Siva Kiran Guptha & R. Prabhakar Rao, 2018. "The causal relationship between financial development and economic growth: an experience with BRICS economies," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 20(2), pages 308-326, October.

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