The Bound Testing Approach for Co-Integration and Causality between Financial Development and Economic Growth in Case of Pakistan

Muhammad, Sulaiman D.; Umer, Muhammad

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The Bound Testing Approach for Co-Integration and Causality between Financial Development and Economic Growth in Case of Pakistan

European Journal of Social Sciences, Vol. 13, No. 4, p. 525, 2010

7 Pages Posted: 13 Feb 2012

See all articles by Sulaiman D. Muhammad

Sulaiman D. Muhammad

Federal Urdu University of Arts Science & Technology

Muhammad Umer

University of Karachi - Applied Economics Research Center

Date Written: April 12, 2010

Abstract

The supply-leading or demand-following hypotheses are examined in this study in case of Pakistan. There are two prime objectives of this study first to check the existence of co-integration between financial development and economic growth and second the direction of causality between the two. The result favors that the demand-following hypothesis is rejected by the supply-leading hypothesis with reference to Pakistan, which is proposed in this results that there are more than one co integration vector between financial development and real per capita income; it is found that unidirectional causality runs from real per capita income to financial development.

Keywords: Financial Development, Economic growth, ARDL

Suggested Citation: Suggested Citation

Muhammad, Sulaiman D. and Umer, Muhammad, The Bound Testing Approach for Co-Integration and Causality between Financial Development and Economic Growth in Case of Pakistan (April 12, 2010). European Journal of Social Sciences, Vol. 13, No. 4, p. 525, 2010, Available at SSRN: https://ssrn.com/abstract=2003777