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Financial Development and GDP Volatility in China

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  • Abu N. M. Wahid
  • Abdul Jalil

Abstract

This paper tests the relationship between financial development and GDP volatility using Chinese data for the period 1977–2006. Our findings in this study suggest that a higher financial development reduces the volatility of real per capita GDP. The Autoregressive Distributed Lag (ARDL) technique to cointegration is employed to establish the existence of a long run relationship between financial developments and standard deviation of GDP – a measure of GDP volatility. In addition, this research draws some policy implications for further development of the financial sectors for economic stability and sustainable growth in China.

Suggested Citation

  • Abu N. M. Wahid & Abdul Jalil, 2010. "Financial Development and GDP Volatility in China," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 39(1‐2), pages 27-41, February.
    • Handle: RePEc:bla:ecnote:v:39:y:2010:i:1-2:p:27-41
    DOI: 10.1111/j.1468-0300.2010.00225.x
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