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The asymmetric effect of financial development on human capital: Evidence from a nonlinear ARDL approach

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  • Nguyen Minh Ha
  • Bui Hoang Ngoc

Abstract

Human capital accumulation and financial development are two vital determinants of economic growth. Recently, human development has been increasingly seen as the ultimate goal of development, rather than economic growth, because it primarily affects future well-being. Financial development is expected to have a positive impact on human development. However, the conclusions of previous studies are inconsistent. In this work, we use a nonlinear autoregressive distributed lag method and asymmetric causality analysis to probe the potential asymmetric effect of financial development and economic growth on the human capital index per capita in Vietnam from 1992 to 2017. The outcome obtained shows that the influence of financial development and economic growth is strong and positive on human capital. The empirical results also indicate that the impact of financial development is symmetric in the short run but asymmetric in the long run. Asymmetric Granger causality from the positive changes in financial development to human capital is found. Based on the empirical results, several policy implications are suggested for emerging countries, including Vietnam.

Suggested Citation

  • Nguyen Minh Ha & Bui Hoang Ngoc, 2022. "The asymmetric effect of financial development on human capital: Evidence from a nonlinear ARDL approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 31(6), pages 936-952, August.
    • Handle: RePEc:taf:jitecd:v:31:y:2022:i:6:p:936-952
    DOI: 10.1080/09638199.2022.2043930
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    Cited by:

    1. Hussain, Muzzammil & Bashir, Adnan & Wang, Chen & Wang, Yiwen, 2023. "World uncertainty, natural resources, consumer prices, and financial development in high-income countries," Resources Policy, Elsevier, vol. 81(C).
    2. Ololade Periola & Monsurat Foluke Salami, 2024. "Remittance outflow, financial development and macroeconomic indicators: evidence from the UK," Future Business Journal, Springer, vol. 10(1), pages 1-12, December.
    3. Changjun Zheng & Sinamenye Jean-Petit, 2023. "The Effects of the Interactions Between Agro-Production, Economic, and Financial Development on Bank Sustainability," SAGE Open, , vol. 13(2), pages 21582440231, June.
    4. Abdullah Mohammed Al-Malki & Mehboob-Ul Hassan & Jabbar Ul-Haq, 2023. "Nexus between remittance outflows and economic growth in GCC countries: the mediating role of financial development," Applied Economics, Taylor & Francis Journals, vol. 55(46), pages 5451-5463, October.
    5. Bui Hoang Ngoc, 2022. "Do Tourism Development and Globalization Reinforce Ecological Footprint? Evidence From RCEP Countries," SAGE Open, , vol. 12(4), pages 21582440221, December.

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