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Does Financial Instability Weaken The Finance-Growth Nexus? A Case For Pakistan

Author

Listed:
  • Muhammad Shahbaz Author_Email:

    (Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan)

  • Muhammad Nasir Malik

    (Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan)

Abstract

The paper investigates whether financial instability weakens finance-growth nexus in case of Pakistan. In doing so ARDL bounds testing approach is used for cointegration among variables over the period of 1971-2005. The results show that financial instability does weaken finance-growth nexus. Trade openness increases economic growth through spillover effects. Increasing inflation retards economic growth i.e., lower inflation rates are necessary for sustained economic growth. Political instability impedes economic growth. The present study indicates new direction for policy makers to sustain the pace of economic growth and avoid financial crisis.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Muhammad Shahbaz Author_Email: & Muhammad Nasir Malik, 2011. "Does Financial Instability Weaken The Finance-Growth Nexus? A Case For Pakistan," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-174, Conference Master Resources.
    • Handle: RePEc:cms:2icb11:2011-174
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    Cited by:

    1. Ionescu Cristian, 2012. "Financial Instability, Financial Development And Poverty," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 142-145, December.
    2. repec:asi:ajoerj:2013:p:752-762 is not listed on IDEAS
    3. Muhammad Shahbaz & Faridul Islam & Muhammad Sabihuddin Butt, 2016. "Finance–Growth–Energy Nexus and the Role of Agriculture and Modern Sectors: Evidence from ARDL Bounds Test Approach to Cointegration in Pakistan," Global Business Review, International Management Institute, vol. 17(5), pages 1037-1059, October.

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    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General

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