scholarly journals Interaction between Financial Development and Sustainable Development, Evidence from Developing Countries: A Panel Data Study

2016 ◽  
Vol 8 (2) ◽  
pp. 243
Author(s):  
Badri Houda ◽  
Mazigh Jaidane Lamia
Keyword(s):  
Sustainable Development ◽  
Developing Countries ◽  
Panel Data ◽  
Financial Development ◽  
Banking Sector ◽  
Financial System ◽  
Complex Concept ◽  
Life Expectancy At Birth ◽  
Favorable Impression ◽  
Domestic Credit

Sustainable development is a complex concept of the world’s and is an major challenge for all countries. For that reason, some authors have argued the essential role of financial development to stimulate the various pillars of this concept, respectively, the economic pillar, ecological and social. The objective of this paper is to study how the financial system in developing countries contributes to the improvement of sustainable development, focusing particularly on the environmental pillar. Estimations are conducted with a panel data of 20 development countries over the period of 1995-2011 using Econometrics static panel. Our findings show that financial system in developing countries, generally has a favorable impression on Environmental, unfavorable effect for industrial investment and economic growth, but in contrast, in insignificant effect for domestic credit provided by banking sector relative to GDP and Life expectancy at birth, total (years).

scholarly journals The Nexus between Financial Development and Economic Growth: Panel Data Evidence from Developing Countries

2021 ◽  
Vol 14 (10) ◽  
pp. 489
Author(s):  
E. M. Ekanayake ◽  
Ranjini Thaver
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Panel Data ◽  
Least Squares ◽  
Financial Development ◽  
Panel Cointegration ◽  
Sub Saharan Africa ◽  
Explanatory Variables ◽  
Cointegration Tests ◽  
Sub Saharan

The objective of this study is to investigate the nexus between financial development (FD) in economic growth (GROWTH) in developing countries. The study uses panel data from 138 developing countries during the period 1980–2018. The relationship between financial development and economic growth is investigated using four explanatory variables that are commonly used to measure the level of financial development and several other control variables, including a dummy variable representing the financial and banking crises. The sample of 138 developing countries is also classified into six geographic regions. We have carried out panel unit-root tests and panel cointegration tests before estimating the specified models using both Panel Least Squares (Panel LS) and Panel Fully Modified Least Squares (FMOLS) methods. In addition, panel Granger causality tests have been conducted to identify the direction of causality between FD and GROWTH for each of the regions. The results of the study provide evidence of a direct relationship between FD and GROWTH in developing countries. Furthermore, there is evidence of bi-directional causality running from FD to GROWTH and from GROWTH to FD in samples of Europe and Central Asia, South Asia, and all countries, but not in East Asia and Pacific, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa.

The relationship between financial development and effectiveness of monetary policy: new evidence from ASEAN-3 countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zulkefly Abdul Karim ◽  
Danie Eirieswanty Kamal Basa ◽  
Bakri Abdul Karim
Keyword(s):  
Monetary Policy ◽  
Money Supply ◽  
Financial Development ◽  
Open Economy ◽  
Banking Sector ◽  
Financial System ◽  
The Philippines ◽  
Output Growth ◽  
Content Type ◽  
The Relationship

Purpose This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries (Singapore, Malaysia and the Philippines). Design/methodology/approach This study uses an open economy structural vector autoregressive model to generate MPE. Then, an autoregressive distributed lagged (ARDL) model is used to analyze the effect of FD on MPE across countries. Findings The findings revealed that FD plays a different role in MPE across countries. In Malaysia, a more developed financial system tends to reduce the MPE on output, whereas in Singapore, results show that the more developed financial system (stock market capitalization) tends to increase MPE on output. However, in the Philippines, the main results show that the effect of FD (liquid liabilities) upon MPE on output is depending on the policy variable (interest rates or money supply). Originality/value This paper fills this gap by providing the first study of ASEAN-3 countries in examining how effective is a monetary policy in response to the development of the financial market across the country. Second, this paper considers two FD indicators, namely, the banking sector and capital market development in investigating its effect on MPE on output and inflation. Third, the authors construct the MPE in each country using a structural (identified) VAR model by aggregating the response of output growth and inflation rate on monetary policy changes (interest rate and money supply) using impulse–response function. Regarding this, the results of this study provide new empirical evidence and insight into the long debate on the relationship between FD and the MPE.

scholarly journals Financial Development and Economic Growth: Evidence from Nepal

2020 ◽  
Vol 32 (1) ◽  
pp. 15-36
Author(s):  
Ramesh C. Paudel ◽  
Chakra Pani Acharya
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Banking Sector ◽  
Time Series Data ◽  
Series Data ◽  
Distributed Lag ◽  
Domestic Credit ◽  
Good Policy

This paper aims to examine the role of financial development and economic growth in Nepal employing Autoregressive distributed lag (ARDL) approach of cointegration using time series data for the period from 1965 to 2018. Nepal is a unique country with big markets in the neighbors-India and China but remains as one of the poor landlocked developing countries, even being the earlier entrant in liberalization and reform. Nepal recently went through a substantial political transition and now the stable government is seeking substantial amount of foreign direct investment. In this background, it will be better, for a good policy analysis, to know how the financial activities have played the role in highly intended economic growth. We develop a model with five proxies of financial development (broad money, domestic credit to private sector, total credit from banking sector, capital formation, and foreign direct investment); and econometrically test their contribution in economic growth. Overall, the results suggest that financial development causes to economic growth substantially, except in the case of foreign direct investment. This result warns the policy makers to be more serious making investment friendly economy to attract the expected foreign direct investment.

Financial development and environmental performance: evidence from China

2010 ◽  
Vol 16 (1) ◽  
pp. 93-111 ◽  
Author(s):  
KARL YUXIANG ◽  
ZHONGCHANG CHEN
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Environmental Protection ◽  
Financial Development ◽  
Environmental Performance ◽  
Industrial Pollution ◽  
Econometric Analysis ◽  
Policy Makers

ABSTRACTThis paper extends the debate on the environmental performance of developing countries by focusing on a new factor. Theoretically, financial development has capitalization, technology, income, and regulation effects on the environment. Using the provincial panel data of China, the econometric analysis provides some evidence of a linkage between financial development and industrial pollution discharges. In recent years, the environmental performance of China has been significantly improved by financial development and some environmental protection schemes. This relationship offers new implications for policy makers in developing countries.

scholarly journals Financial development and economic growth: literature survey and empirical evidence from sub-Saharan African countries

2011 ◽  
Vol 12 (1) ◽  
pp. 11-27 ◽  
Author(s):  
Songul Kakilli Acaravci ◽  
Ilhan Ozturk ◽  
Ali Acaravci
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Banking Sector ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Real Gdp ◽  
Long Run ◽  
Domestic Credit ◽  
Real Gdp Per Capita ◽  
Sub Saharan

In this paper we review the literature on the finance-growth nexus and investigate the causality between financial development and economic growth in Sub-Saharan Africa for the period 1975-2005. Using panel co-integration and panel GMM estimation for causality, the results of the panel co-integration analysis provide evidence of no long-run relationship between financial development and economic growth. The empirical findings in the paper show a bi-directional causal relationship between the growth of real GDP per capita and the domestic credit provided by the banking sector for the panels of 24 Sub-Saharan African countries. The findings imply that African countries can accelerate their economic growth by improving their financial systems and vice versa.

scholarly journals Financial development and economic growth: Role of institutional quality

2009 ◽  
Vol 56 (3) ◽  
pp. 327-357 ◽  
Author(s):  
Abdelkarim Yahyaoui ◽  
Atef Rahmani
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Human Capital ◽  
Panel Data ◽  
Financial Development ◽  
Institutional Quality ◽  
The Real ◽  
Development Institutions

The objective of our work is to show the importance of a healthy institutional framework in the finance-growth relation. In this context, we start by presenting, a theoretical lighting on this subject while trying to define the concept of the governorship and to determine its various measurements. Then, we empirically test a model of growth of Solow increased by the human capital, treating relation between financial development, institutions and economic growth. The various estimates were made by Panel data Methods over the period of 1990 to 2006 for 22 developing countries. Following these estimates, it seems that the quality of the institutions is regarded as an important factor which must not be neglected in the study of the relation between the financial sphere and the real sphere.

Investigation for Finance–Growth Nexus: A Dynamic Common Correlated Estimator Approach

2021 ◽  
pp. 097215092110162
Author(s):  
Saqib Mehmood ◽  
Ahmad Raza Bilal
Keyword(s):  
Developing Countries ◽  
Private Sector ◽  
Least Squares ◽  
Financial Development ◽  
Well Being ◽  
Ordinary Least Squares ◽  
Consumption Expenditures ◽  
Long Run ◽  
Domestic Credit ◽  
The Impact

The study investigated the impact of financial development in bringing the economic well-being, using the data of 10 selected developing countries, as a sample for the period from 1991 to 2017. However, the study utilizes the regression of group mean dynamic common correlated estimator (DCCE) by Chudik and Pesaran (2015) to analyse the said circumstance. For estimation, the present study is considering the major tycoons of financial development and their relevant areas that are significantly effecting the economic growth. However, the broad money (GAM1), domestic credit to private sector to GDP (GAM2), domestic credit to private sector by banks (GAM3), government’s final consumption expenditures (GAFCE) and foreign direct investment GAFC are major contributors in attaining the GDP per capita (GADA). However, the estimation of the concerned circumstance was also evaluated in terms of shorter and longer run estimations. The results of the short– and long–run estimations also authenticate the results of DCCE estimations. The robustness of the results is verified with the help of Pedroni (2004) test, fully modified ordinary least squares (FMOLS) test by Pedroni (2001) and dynamic ordinary least squares (DOLS) by Stock and Watson (1993) . The robustness tests also verify the factors that are considered as the major players of financial development for uplifting the concerned economies. Selected developing countries have the potential for utilizing their financial development options to manage their growth at the economic level. For practical implications and for policymaking, the ingredients of this particular study can be endorsed to get the desired results.

scholarly journals Financial development and economic growth in the CEPGL region: evidence based on panel data

2021 ◽  
Vol 39 (2) ◽  
Author(s):  
Alexis Nyamugira Biringanine ◽  
Kazamwali Mzee
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Financial Development ◽  
Fixed Effects ◽  
Economic Status ◽  
Financial System ◽  
Fixed Effects Model ◽  
Correction Model ◽  
Bidirectional Relationship ◽  
The Relationship

This paper contributes to the huge debate on the relationship between financial development and the economic growth. The evidence is applied to the CEPGL (Communauté Economique des Pays des Grands Lacs) region. Previous studies have concluded either to the absence of connection between the two spheres, to a unidirectional or bidirectional relationship, or to a differentiated connection depending on the economic status of development of the country. The research design applied in this research has been inspired by the reality of the region by running an Error Correction Model for each country and a fixed effects model on panel data for the whole region. Therefore, we estimated econometric models from a series of macroeconomic data relating to the depth, and the accessibility of the financial system. The data used in this study range from 1976 to 2013. Insights from this study show that the financial system of the region is extremely underdeveloped, a weak connection between the financial and the economic sphere, in addition to an ambivalent sense of causality. 

scholarly journals Perilaku Tabungan ASEAN 5, Jepang, Cina, Korea, dan Implikasinya terhadap Ketidakseimbangan Global

2012 ◽  
Vol 13 (1) ◽  
pp. 19-30
Author(s):  
Sugiharso Safuan ◽  
Heidy Ruswita Sari
Keyword(s):  
Panel Data ◽  
Interest Rate ◽  
Financial Development ◽  
Government Spending ◽  
Fixed Effect ◽  
Global Imbalances ◽  
Panel Data Regression ◽  
Data Regression ◽  
Domestic Credit ◽  
Saving Behavior

AbstractThe study examines saving behavior in ASEAN 5+3 namely Indonesia, Malaysia, Singapore, Thailand, Philippines, Japan, Cina, and Korea during 1991-2007 and its implication toward global imbalances. By using fixed effect panel data regression, this research shows that government spending, interest rate and inflation, financial development through private domestic credit and stock market capitalization along with the 1997 Asian crisis significantly affect the saving behavior. As a result, a macroeconomic stability through interest rate and inflation, the reinforcement of financial development and crisis anticipation policy are required to support global rebalancing through global saving redistribution.Keywords: Global Imbalances, Private Saving, Financial Development, Panel Fixed Effect AbstrakStudi ini membahas perilaku tabungan negara-negara ASEAN 5+3, yaitu Indonesia, Malaysia, Singapura, Thailand, Filipina, Jepang, Cina, dan Korea, dan implikasinya terhadap ketidakseimbangan global. Dengan menggunakan regresi data panel fixed effect, kajian ini menunjukkan bahwa indikator skal belanja pemerintah, indikator makroekonomi suku bunga dan inflasi, indikator perkembangan berupa finansial kredit domestik swasta dan kapitalisasi pasar saham serta krisis Asia 1997 secara signifikan memengaruhi perilaku tabungan. Implikasinya adalah stabilitas makroekonomi melalui inflasi dan suku bunga serta pengembangan pasar finansial dan kebijakan antisipasi krisis diperlukan untuk mendorong penyeimbangan global kembali melalui redistribusi tabungan dunia.Kata kunci: Ketidakseimbangan Global, Tabungan, Perkembangan Finansial, Panel Fixed Effect

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