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Reconsidering the Finance-Growth Nexus in Asian Countries: A Panel ARDL Approach

Author

Listed:
  • Bilal Mehmood

    (Department of Economics, GC University, Lahore, Pakistan)

  • Parvez Azim

    (Department of Economics, GC University, Faisalabad, Pakistan)

  • Syed Hassan Raza

    (Department of Economics, Lahore Leads University, Lahore, Pakistan)

Abstract

Financial sector is a vital segment of an economy. To elucidate its role in economic growth, this paper empirically examines its role for Asian countries. We examine and quantify this long run relationship for a sample of 12 Asian countries with data on relevant variables for a large time dimension (1970 to 2012). Panel Autoregressive Distributed Lag model (ARDL) is used to find long run relationship. Panel ARDL being a heterogeneous panel estimation technique allows the slope and short run parameters to vary across the countries. Results show the presence of long run relationship between financial development and national income. The positive contribution of financial development is quantified using Fully Modified OLS and dynamic OLS as well as. Bi-causality is also found between financial development and economic growth. Recommendations are made on the basis of empirical analysis.

Suggested Citation

  • 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.
    • Handle: RePEc:ijr:journl:v:3:y:2015:i:1:p:1-5
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    References listed on IDEAS

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    7. Christopoulos, Dimitris K. & Tsionas, Efthymios G., 2004. "Financial development and economic growth: evidence from panel unit root and cointegration tests," Journal of Development Economics, Elsevier, vol. 73(1), pages 55-74, February.
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    Cited by:

    1. Bilal Mehmood & Syed Hassan Raza & Rizwan Baqar, 2015. "Defence, Debt and Democracy: The 3D in South Asia," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(7), pages 312-319, July.
    2. Waseem Khadim & Saddam Ilyas & Bilal Mehmood, 2016. "Of Inflation and Growth Nexus in BRIMC Economies," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 4(1), pages 32-45, January.

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    More about this item

    Keywords

    Financial Development; National Income; Pakistan;
    All these keywords.

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics

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