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Impact of Development and Efficiency of Financial Sector on Economic Growth: Empirical Evidence from Developing Countries

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  • Najia SAQIB

    (Assistant Professor, Business Administration Department, Prince Sultan University Riyadh)

Abstract

This paper analyses the impact of development and efficiency of financial sector on economic growth of a group of selected developing countries using a cross-country data averaged over the period 2005-2009. The results show that the impact of financial sector efficiency on economic growth is significantly positive for developing countries. For a sample of 50 developing countries the effect of financial sector development and financial sector efficiency is positive and highly significant. The sensitivity analysis also shows that the relationship remain positive and significant no matter what combination of the omitted variables are used in the basic model. Thus, our findings support the core idea that development and efficiency of financial sector stimulates economic growth.

Suggested Citation

  • Najia SAQIB, 2013. "Impact of Development and Efficiency of Financial Sector on Economic Growth: Empirical Evidence from Developing Countries," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(3), pages 1-9, June.
    • Handle: RePEc:spp:jkmeit:1386
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    Cited by:

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    2. Süleyman KALE & Mehmet Hasan EKEN, 2022. "Bank Efficiency and Economic Growth in the OECD Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 46-66, October.
    3. Rasha Istaiteyeh & Maysa’a Munir Milhem & Farah Najem & Ahmed Elsayed, 2024. "Determinants of Operating Efficiency for the Jordanian Banks: A Panel Data Econometric Approach," IJFS, MDPI, vol. 12(1), pages 1-17, January.
    4. Mesut Alper GEZER, 2018. "The relationship between financial deepening and economic growth: Bootstrap causality approach for the selected upper middle income countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(614), S), pages 95-112, Spring.
    5. Md. Qamruzzaman & Jianguo Wei, 2018. "Financial Innovation, Stock Market Development, and Economic Growth: An Application of ARDL Model," IJFS, MDPI, vol. 6(3), pages 1-30, August.

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    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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