scholarly journals The Direction of Causality between Economic Growth and Financial Development in Upper Middle-Income Countries

2021 ◽  
Vol 5 (1) ◽  
pp. 49-68
Author(s):  
Nagmi AİMER ◽  
Serkan DİLEK ◽  
Abdulmula LUSTA
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Middle Income ◽  
Middle Income Countries

Financial Development–Economic Growth Nexus: Evidence from South Asian Middle-income Countries

2017 ◽  
Vol 18 (4) ◽  
pp. 924-935 ◽  
Author(s):  
Krishna Murari
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Financial Development ◽  
South Asian ◽  
Banking Sector ◽  
Middle Income ◽  
Market Capitalization ◽  
Middle Income Countries ◽  
Fixed Capital Formation ◽  
Domestic Credit

In this article, we have tried to explore the relationship between financial development and economic growth, using a panel data of South Asian middle-income countries for the years 1980–2013. The macroeconomic data include real GDP index as an indicator of economic growth, proxies for financial development—domestic credit by banking sector/GDP, domestic credit to private sector/GDP, net inflows of FDI/GDP, M2/GDP and market capitalization/GDP and control variables such as fixed capital formation/GDP, investment/GDP, and inflation in consumer prices/GDP. The results indicate that the domestic credit provided by the banking sector has a significant association with economic growth in both directions but domestic credit to the private sector is associated with the economic growth in forward direction only, which confirms dearth in credit allocation in the region and suggests pathetic financial regulation and supervision. As far as the stock market developments are concerned, the results indicate that the stock market capitalization and liquidity have a significant role in growth and economic growth induces the stock market capitalization (size). Both the forms of investment (domestic and FDI) contribute significantly to economic growth in either direction. Stronger financial institutions, fixed capital formation and low inflation are crucial growth controlling factors.

scholarly journals Foreign aid on economic growth in Africa: A comparison of low and middle-income countries

2015 ◽  
Vol 18 (4) ◽  
pp. 449-462 ◽  
Author(s):  
Aye Mengistu Alemu ◽  
Jin-Sang Lee
Keyword(s):  
Economic Growth ◽  
Foreign Aid ◽  
Low Income ◽  
Empirical Studies ◽  
Critical Role ◽  
Generalized Method Of Moments ◽  
African Countries ◽  
Middle Income ◽  
Middle Income Countries ◽  
Theoretical Hypothesis

Previous empirical studies on the effects of foreign aid on economic growth have generated mixed results that make it difficult to draw policy recommendations. The main reason for such mixed results is the choice of a single aggregate list of countries, regardless of the disparities in levels of development. This study therefore fills the development gap by disaggregating the African data into a panel of 20 middle- income and 19 low- income African countries over a period of 15 years between 1995 and 2010, and employing a dynamic generalized method of moments (GMM) model to address the dynamic nature of economic growth as well as the problems of endogeneity. The results of this study support the theoretical hypothesis that a positive relationship between aid and GDP growth exists, but only for low-income African countries, not middle-income ones. On the other hand, the study reveals that middle- income African countries tend to experience a greater impact on their economic growth from foreign direct investment (FDI) and natural resources revenues, mainly oil exports. This implies that the frequent criticism that foreign aid has not contributed to economic growth is flawed, at least in the case of low-income African countries. In fact, foreign aid has played a critical role in stimulating economic growth in such countries through supplementing domestic sources of finance such as savings, thus increasing the amount of investment and capital stock in them.

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