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Financial Globalization and Economic Growth in South Asia

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  • N. R. Bhanumurthy
  • Lokendra Kumawat

Abstract

The article examines relationship between financial globalization and economic growth in South Asian countries namely Bhutan, Bangladesh, India, Maldives, Nepal, Pakistan and Sri Lanka. Following the framework of Bekaert et al. (2005) and with the help of Panel VAR and Panel causality (in GMM framework) models the study concludes that the causation from financial globalization to growth in the region appears to be weak. There appears reverse causation running from growth to financial globalization. We found that domestic macroeconomic policies such as fiscal prudence act as pull factors for foreign capital. The article has some interesting results at individual country level. JEL: C33, F21, F36, F65

Suggested Citation

  • N. R. Bhanumurthy & Lokendra Kumawat, 2020. "Financial Globalization and Economic Growth in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 21(1), pages 31-57, March.
  • Handle: RePEc:sae:soueco:v:21:y:2020:i:1:p:31-57
    DOI: 10.1177/1391561420909007
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    2. Shastri, Shruti & Giri, A.K. & Mohapatra, Geetilaxmi, 2022. "Foreign capital inflows and poverty linkages in South Asia: Do the forms of capital inflows matter?," Economic Systems, Elsevier, vol. 46(3).
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    5. Aderemi Timothy Ayomitunde & Ogunleye Akin George & Lucas B. Ojo & Okoh Johnson Ifeanyi, 2020. "Globalization and Economic Growth: Evidence from European Countries," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2020(1), pages 67-82.
    6. Burman, Anirudh & Patnaik, Ila & Roy, Shubho & Shah, Ajay, 2018. "Diagnosing and overcoming sustained food price volatility: Enabling a National Market for Food," Working Papers 18/236, National Institute of Public Finance and Policy.
    7. Yuanzhi Liu & Akintoye Victor Adejumo & Oluwabunmi Opeyemi Adejumo & Timothy Ayomitunde Aderemi, 2022. "Globalization and Economic Growth: A Sustainability Analysis for South Asian Countries," Global Policy, London School of Economics and Political Science, vol. 13(4), pages 507-522, September.

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    More about this item

    Keywords

    Financial globalization; economic growth; capital flows; South Asia; panel VAR;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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