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South Korea’s finance--growth nexus: evidence from VARX analysis with financial crisis and openness

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  • Takashi Fukuda

Abstract

South Korea’s finance--growth nexus is empirically investigated by taking the elements of financial crisis and trade and financial openness through the newly developed approach of vector error-correction models (ECMs) with weakly exogenous I (1) variables (VARX). Considering financial development as a more complex phenomenon, we take into estimation two aspects of financial deepening that are measured by its size (private credit to GDP) and efficiency (private credit to total domestic deposits). The main findings are (1) financial efficiency contributes to accelerating economic growth; (2) the causality between economic growth and financial size is bilateral and negative; and (3) financial crisis is negative to both economic growth and financial development, whereas the growth-promoting effects of trade and financial openness are confirmed.

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  • Takashi Fukuda, 2016. "South Korea’s finance--growth nexus: evidence from VARX analysis with financial crisis and openness," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 9(1), pages 18-33, March.
    • Handle: RePEc:taf:macfem:v:9:y:2016:i:1:p:18-33
    DOI: 10.1080/17520843.2015.1085425
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    Cited by:

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    2. Ahmad, Nisar & Aghdam, Reza FathollahZadeh & Butt, Irfan & Naveed, Amjad, 2020. "Citation-based systematic literature review of energy-growth nexus: An overview of the field and content analysis of the top 50 influential papers," Energy Economics, Elsevier, vol. 86(C).

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