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Does Corruption Increase Financial Development? A Time Series Analysis in Pakistan

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  • Muhammad, Shahbaz
  • Qazi, Muhammad Adnan Hye
  • Muhammad, Shahbaz Shabbir

Abstract

The aim of present paper is to investigate the effect of corruption on financial development in Pakistan by using ARDL bounds testing approach to cointegration. The direction of causal relationship between the variables is examined by using VECM granger causality approach. Our empirical findings indicate that corruption promotes financial development. Causality analysis reveals that corruption and financial development are complementary.

Suggested Citation

  • Muhammad, Shahbaz & Qazi, Muhammad Adnan Hye & Muhammad, Shahbaz Shabbir, 2011. "Does Corruption Increase Financial Development? A Time Series Analysis in Pakistan," MPRA Paper 29640, University Library of Munich, Germany, revised 10 Mar 2011.
  • Handle: RePEc:pra:mprapa:29640
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    References listed on IDEAS

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    Cited by:

    1. Shahbaz, Muhammad, 2010. "Does financial instability increase environmental pollution in Pakistan?," MPRA Paper 31360, University Library of Munich, Germany, revised 28 Mar 2011.

    More about this item

    Keywords

    Financial Development; Corruption; Cointegration;

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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