Financial Development and Economic Growth: The Case of Eight Asian Countries
Macquarie Economics Working Paper No. 7/99
Posted: 23 Jun 2000
Date Written: August 1999
This paper looks at the relationship between financial development and economic development using time series data for eight Asian countries. First, we estimate augmented production functions where a financial development variable is added. Second, we conduct multivariate causality tests between the growth rate of income and the growth rates of the financial development variables. The regression results show a positive and significant relationships between the income variables and financial variables for India, Malaysia, Pakistan and Sri Lanka. The multivariate causality tests show that two-way causality between the income and the financial variables for India and Malaysia, one-way causality from financial variables to income variables for Japan and Thailand and the reverse causality for Korea, Pakistan and Philippines.
JEL Classification: C32, E51, O10
Suggested Citation: Suggested Citation