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Financial Development and Output Growth: A Panel Study for Asian Countries

Author

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  • Jun, Sangjoon

    (Kangnam University)

Abstract

This paper investigates the relationship between financial markets and output growth for a panel of 27 Asian countries over 1960-2009. It utilizes the recently-developed panel cointegration techniques to test and estimate the long-run equilibrium relationship between real GDP and financial development proxies. Real GDP and financial development variables are found to have unit roots and to be cointegrated, based on various panel unit root tests and panel cointegration tests. We find that there is a statistically significant positive bi-directional cointegrating relationship between financial development and output growth by three distinct methods of panel cointegration estimation. Empirical findings suggest that financial market development promotes output growth and in turn output growth stimulates further financial development.

Suggested Citation

  • Jun, Sangjoon, 2012. "Financial Development and Output Growth: A Panel Study for Asian Countries," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 16(1), pages 97-115, March.
    • Handle: RePEc:ris:eaerev:0080
    DOI: 10.11644/KIEP.JEAI.2012.16.1.244
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    Cited by:

    1. Ebru TOPCU Author- Workplace-Name: Nevsehir Haci Bektas Veli University, Department of Economics, Turkey, 2016. "Reexamining Finance-Growth Nexus: A New Literature Survey," EcoForum, "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration - Economy, Business Administration and Tourism Department., vol. 5(Special I), pages 1-7, august.
    2. Lerohim, Siti Nor FarahEffera & Affandi, Salwani & W. Mahmood, Wan Mansor, 2014. "Financial Development and Economic Growth in ASEAN: Evidence from Panel Data," MPRA Paper 62224, University Library of Munich, Germany, revised 31 Dec 2014.
    3. Krishna Murari, 2017. "Financial Development–Economic Growth Nexus: Evidence from South Asian Middle-income Countries," Global Business Review, International Management Institute, vol. 18(4), pages 924-935, August.
    4. M. Sani, Nur Fatin Najwa & Ismail, Fathiyah & W. Mahmood, Wan Mansor, 2014. "Causal relationship between financial depth and economic growth: evidence from Asia-Pacific Countries," MPRA Paper 62188, University Library of Munich, Germany.
    5. Bilal Mehmood & Parvez Azim & Syed Hassan Raza, 2015. "Reconsidering the Finance-Growth Nexus in Asian Countries: A Panel ARDL Approach," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(1), pages 1-5, January.
    6. Vijay Kumar & Ron Bird, 2020. "Do Profitable Banks Make a Positive Contribution to the Economy?," JRFM, MDPI, vol. 13(8), pages 1-18, July.
    7. 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.

    More about this item

    Keywords

    Output Growth; Financial Development; Panel Unit Root and Cointegration; Bi-directional Relationship;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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