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The Nexus Between Financial Development and Economic Growth in Lao PDR

  • Kyophilavong, Phouphet
  • Salah Uddin, Gazi
  • Shahbaz, Muhammad

The relationship between financial development and economic growth is not conclusive in existing economics literature. The aim of this paper is to test two hypotheses: ‘supply-leading’ hypothesis and ‘demand-following’ hypothesis, using Laos time series data. The ARDL bounds testing approach to cointegration is used to carry out this task. Our results confirm the presence of feedback effect between both variables. Financial development promotes economic growth and in resulting, economic growth leads financial development.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 57308.

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Date of creation: 10 Jul 2014
Date of revision: 14 Jul 2014
Handle: RePEc:pra:mprapa:57308
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