Financial development and economic growth : Evidence from a panel study on South Asian countries

- Hasan Rana, Rezwanul, Barua, Suborna

Title
Financial development and economic growth : Evidence from a panel study on South Asian countries
Creator
Hasan Rana, Rezwanul; Barua, Suborna
Date
2015
Type
Text; Journal article
Identifier
http://researchonline.federation.edu.au/vital/access/HandleResolver/1959.17/162402
Identifier
vital:12657
Identifier
https://doi.org/10.18488/journal.aefr/2015.5.10/102.10.1159.1173
Identifier
ISBN:2222-6737
Abstract
The paper examines the relationship between financial development and economic growth using panel data for five emerging South Asian countries - Bangladesh, India, Nepal, Pakistan and Sri Lanka. The heterogeneous panel data is collected from the World Bank for the period of 1974 to 2012. Economic Growth is represented by GDP growth rate, and for Financial Development, five major variables have been used: (i) Domestic Credit Provided by Financial Sector, (ii) Total Debt Services, (iii) Gross Domestic Savings, (iv) Broad Money, and (v) Trade Balance. Fixed Effect Panel regression model has been used and Time Fixed Effect, Cross Sectional Dependence, Heteroskedasticity, Serial Correlation and Cointegration have been tested for model fitness. The results indicate that growth of total debt services and domestic savings have significant impact on economic development of these countries. Interestingly, broad money, trade balance and domestic credit have no considerable influence on fostering economic growth which is generally unexpected. The paper places several arguments to explain these results. The study appears to be a first hand examination on the South Asian countries and adds new insight into the existing literature. The findings and discussions presented would be valuable in designing long term financial and macroeconomic policies by these countries.
Relation
Asian Economic and Financial Review Vol. 5, no. 10 (2015), p. 1159-1173
Rights
© 2015 AESS Publications
Rights
This metadata is freely available under a CCO license
Subject
Financial development; Economic growth; Financial economics; Economic development; South Asia; Panel cointegration
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