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Impact of financial liberalization on agricultural growth: a case study of Pakistan

Author

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  • Qazi Muhammad Adnan Hye
  • Shahida Wizarat

Abstract

Purpose - The purpose of this paper is to develop a financial liberalization index (FLI) and evaluate its impact on agricultural growth. Design/methodology/approach - The study uses the autoregressive distributed lag approach to determine the long run and short coefficients. Findings - The empirical results show that FLI affects agricultural growth positively in the short and the long run; but real interest rate positively affects agricultural growth in the short run and negatively in the long run. Originality/value - While previous research focuses on overall economic growth, this paper evaluates the impact of financial liberalization on the agricultural sector.

Suggested Citation

  • Qazi Muhammad Adnan Hye & Shahida Wizarat, 2011. "Impact of financial liberalization on agricultural growth: a case study of Pakistan," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(2), pages 191-209, May.
  • Handle: RePEc:eme:caerpp:v:3:y:2011:i:2:p:191-209
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    References listed on IDEAS

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    1. Aaron Tornell & Frank Westermann & Lorenza Martinez, 2004. "The Positive Link Between Financial Liberalization Growth and Crises," UCLA Economics Working Papers 834, UCLA Department of Economics.
    2. Jere R. Behrman & Nancy Birdsall & Gunilla Pettersson, 2009. "Schooling Inequality, Crises, and Financial Liberalization in Latin America," Working Papers 165, Center for Global Development.
    3. Siddiqi, Hammad, 2008. "Information Transmission in Emerging Markets: The Case of a Unique Financing Instrument," MPRA Paper 6714, University Library of Munich, Germany.
    4. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
    5. Oriana Bandiera & Gerard Caprio & Patrick Honohan & Fabio Schiantarelli, 2000. "Does Financial Reform Raise or Reduce Saving?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 239-263, May.
    6. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    7. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 2002. "Government Ownership of Banks," Journal of Finance, American Finance Association, vol. 57(1), pages 265-301, February.
    8. repec:hrv:faseco:30747188 is not listed on IDEAS
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Levine, Ross, 1999. "Law, Finance, and Economic Growth," Journal of Financial Intermediation, Elsevier, vol. 8(1-2), pages 8-35, January.
    11. Ahmed, Abdullahi Dahir., 2007. "Potential impact of financial reforms on savings in Botswana: an empirical analysis using a VECM approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 41(1), pages 203-219, September.
    12. Mattoo, Aaditya & Rathindran, Randeep, 2006. "Measuring Services Trade Liberalization and Its Impact on Economic Growth: An Illustration," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 64-98.
    13. Philip Arestis & Panicos Demetriades, 1999. "Financial Liberalization: The Experience of Developing Countries," Eastern Economic Journal, Eastern Economic Association, vol. 25(4), pages 441-457, Fall.
    14. Gregory, Allan W. & Hansen, Bruce E., 1996. "Residual-based tests for cointegration in models with regime shifts," Journal of Econometrics, Elsevier, vol. 70(1), pages 99-126, January.
    15. Shrestha, M.B. & Chowdhury, k., 2006. "Financial Liberalization Index for Nepal," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 3(1), pages 41-54.
    16. Gregory, Allan W. & Hansen, Bruce E., 1996. "Residual-based tests for cointegration in models with regime shifts," Journal of Econometrics, Elsevier, vol. 70(1), pages 99-126, January.
    17. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    18. Paul Turner, 2006. "Response surfaces for an F-test for cointegration," Applied Economics Letters, Taylor & Francis Journals, vol. 13(8), pages 479-482.
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    Citations

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    Cited by:

    1. Muhammad Shahbaz & Muhammad Shahbaz Shabbir & Muhammad Sabihuddin Butt, 2013. "Effect of financial development on agricultural growth in Pakistan: New extensions from bounds test to level relationships and Granger causality tests," International Journal of Social Economics, Emerald Group Publishing, vol. 40(8), pages 707-728, June.
    2. Qazi Hye & Wee-Yeap Lau & Marie-Aimée Tourres, 2014. "Does economic liberalization promote economic growth in Pakistan? An empirical analysis," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(4), pages 2097-2119, July.

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