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Does financial development improve human capital accumulation in the Southeast Asian countries?

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  • Duc Hong Vo
  • Ngoc Phu Tran
  • Ha Minh Nguyen

Abstract

Financial development and human capital’s crucial roles in economic growth have been widely recognized in the literature. However, a direct link between financial development and human capital, in the long run, has not been investigated, in particular in emerging markets in Asia. This study investigates the nexus between financial development and human capital for a group of nine emerging markets in the Southeast Asian region over the period 1990–2018. Econometric techniques allowing for cross-sectional dependence and panel co-integration, such as the dynamic least squares (DOLS) and fully modified least squares (FMOLS), are used. We also use three indicators as the proxies for financial development: broad money supply, bank credit, and private sector credit. Empirical findings from this paper indicate that financial development contributes positively and significantly to human capital accumulation. We also find that economic growth enhances the formation of human capital. Results from our Granger causality tests confirm a bi-directional relationship between financial development and human capital. Policymakers from the Southeast Asian emerging markets may need to enhance and extend financial development which is closely linked with human capital accumulation.

Suggested Citation

  • Duc Hong Vo & Ngoc Phu Tran & Ha Minh Nguyen, 2021. "Does financial development improve human capital accumulation in the Southeast Asian countries?," Cogent Business & Management, Taylor & Francis Journals, vol. 8(1), pages 1932245-193, January.
    • Handle: RePEc:taf:oabmxx:v:8:y:2021:i:1:p:1932245
    DOI: 10.1080/23311975.2021.1932245
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    Cited by:

    1. Emmanuel, Ongo Nkoa Bruno & Thierry, Mamadou Asngar & Christian, Atangana Zambo Charles & Ludé, Djam'Angai, 2024. "What drives financial market growth in Africa?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. 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).
    3. Joshua Dzankar Zoaka & Hasan Güngör, 2023. "Effects of financial development and capital accumulation on labor productivity in sub-Saharan Africa: new insight from cross sectional autoregressive lag approach," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-18, December.
    4. Sylvia Kor & Md Qamruzzaman, 2023. "Nexus between FDI, Financial Development, Capital Formation and Renewable Energy Consumption; evidence from Bangladesh," International Journal of Energy Economics and Policy, Econjournals, vol. 13(6), pages 129-145, November.

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