Financial Liberalization, Financial Development and Economic Growth: An Analysis of the Financial Sector of Bangladesh

2020 ◽  
pp. 395-418
Author(s):  
Monzur Hossain
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Liberalization ◽  
Financial Sector

Does financial development improve environmental quality in Turkey? An application of endogenous structural breaks based cointegration approach

2018 ◽  
Vol 29 (2) ◽  
pp. 368-384 ◽  
Author(s):  
Javaid Ahmad Dar ◽  
Mohammad Asif
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Environmental Quality ◽  
Unit Root ◽  
Structural Breaks ◽  
Energy Use ◽  
Financial Sector ◽  
Content Type ◽  
Long Run ◽  
Endogenous Structural Breaks

Purpose The purpose of this paper is to investigate the long-run effect of financial sector development, energy use and economic growth on carbon emissions for Turkey, in presence of possible regime shifts over a period of 1960-2013. Design/methodology/approach Along with the conventional unit root tests, Zivot-Andrews unit root test with structural break has been employed to check the stationarity of variables. The cointegrating relationship between variables is investigated by using the autoregressive distributed lag bounds test and Hatemi-J threshold cointegration test. Findings The results confirm a cointegrating relationship between the variables. The long-run relationship between the variables has gone through two endogenous structural breaks in 1976 and 1986. Development of financial sector improves environmental quality whereas energy use and economic growth degrade it. The results challenge the validity of environmental Kuznets curve hypothesis in Turkish economy. Research limitations/implications The study uses domestic credit to private sector as a proxy for development of financial sector. The model can be improved by constructing an index of financial development instead of using a single determinant as a proxy for financial development. Practical implications The study may pave the way for policy makers to capture important environmental pollutants in better way and develop effective and efficient energy and economic policies. This may make significant contribution to curbing CO2 emissions while sustaining economic growth. Originality/value This is the only study to examine long-run impact of financial sector development on carbon emissions, using the threshold cointegration approach. Hence, the study is a gentle request to reduce the possible omitted variable econometric estimation bias and fill the gap in the existing literature.

scholarly journals Causal Relationship Between Financial Sector Development in SMEs & Economic Growth in Southern Africa Region

2021 ◽  
Vol 18 ◽  
pp. 996-1018
Author(s):  
Abigail Chivandi ◽  
Happiness Makumbe ◽  
Olorunjuwon Samuel
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Financial Development ◽  
Financial Sector ◽  
Causal Connection ◽  
Financial Sector Development ◽  
Bidirectional Relationship ◽  
Causality Tests ◽  
Annual Time Series ◽  
Development Support

This study explores causal relationship between financial sector development in SMEs and economic growth in Zimbabwe using annual time series and the Error Correction Model (ECM) framework. Monetary sector improvement and financial development stayed a controversial issue in Southern African nations. Market analysts have distinctive hypothetical and exact perspectives on the causal connection between monetary sector improvement and financial development. support supply driving speculation that monetary sector improvement prompts financial development & credit to request pulling speculation which proposes that monetary improvement results from financial development. Study made use of Unit Root Tests, Cointegration, ECM and Granger Causality Tests. Empirical findings revealed a bidirectional relationship between financial sector development in SMEs, economic & business growth. Business & Economic Growth enhance a strong and flexible legal system allowing banks to allocate resources (credit) more efficiently to SMEs. Credit should be accessed by all enterprise fairly to encourage the development of indigenous businesses through SMEs.

scholarly journals Dynamics of Financial Development, Economic Growth, and Poverty Alleviation: The Indonesian Experience

2018 ◽  
Vol 13 (1) ◽  
pp. 17-30 ◽  
Author(s):  
Sovia Dewi ◽  
M. Shabri Abd. Majid ◽  
Salina Kassim ◽  
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Poverty Rate ◽  
Development Economic ◽  
Annual Data ◽  
Distributed Lag ◽  
Long Run ◽  
The Government

Abstract Although the poverty rate in Indonesia has been declining in the last several years, the rate of poverty decline is slowing down. In order to achieve its poverty reduction target within the stipulated time period, the government has stepped up efforts to enhance the contribution of the financial sector towards poverty reduction. This study aims to empirically explore the interlinkages between financial sector development and poverty reduction in Indonesia. Focusing on annual data covering the period from 1980 to 2015, the study adopts the Autoregressive Distributed Lag (ARDL) cointegration approach to examine the long-run relationship between the variables. The study found that there is a long-run relationship between financial development, economic growth, and poverty reduction in Indonesia. It also documented a unidirectional causality running from the financial sector to poverty reduction and a bidirectional causality between economic growth and poverty reduction. Therefore, policies to ensure the conducive growth of the financial sector would go a long way in promoting the economy, creating employment opportunities, and consequently accelerating poverty eradication

scholarly journals Can financial development influence economic growth: The sub-Saharan analysis?

2019 ◽  
Vol 12 (1) ◽  
Author(s):  
Thobeka Ncanywa ◽  
Karabo Mabusela
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Stability ◽  
Financial Sector ◽  
Financial Economic ◽  
Positive Influence ◽  
African Countries ◽  
Macroeconomic Policies ◽  
Long Run ◽  
Sub Saharan

Orientation: Financial sector development in a vast majority of sub-Saharan African countries has the potential to reduce the volatility of growth.Research purpose: This article is aimed at determining the influence of financial development on economic growth in selected sub-Saharan African countries.Motivation for the study: In most of the sub-Saharan countries, financial sectors are among the world’s least developed, and the absence of deep, efficient financial markets puts major constraints on economic growth.Research approach/design and method: This article employed panel autoregressive and distributive lag model to determine the relationship between financial development and economic growth.Main findings: The results indicated that there exists a short- and a long-run relationship between financial development and economic growth in the selected countries. In the long run, bank credit to the private sector and liquid liabilities have a positive influence on economic growth, with gross domestic savings exhibiting a negative influence.Practical/managerial implications: This article makes recommendations that as financial stability, both globally and within countries, generates jobs and improves productivity, more effort should be made in ensuring an effective and sound developed financial sector system.Contribution/value-add: The financial-economic growth nexus indicate that a well-functioning financial market development can promote economic growth. However, some controversies exist as some evidence indicated that a negative or positive financial development–growth nexus exists, so there was a need to find out what is the sub-Saharan case. Furthermore, there was a need to find development regulatory and macroeconomic policies that enhance growth.

scholarly journals Frequency Domain Causality Relationship Analysis Between Poverty, Economic Growth and Financial Development in Algeria

2019 ◽  
Vol 12 (2) ◽  
pp. 93-111
Author(s):  
Ayad Hicham ◽  
Belmokaddem Mostefa ◽  
Sari Hassoun Salah Eddin
Keyword(s):  
Economic Growth ◽  
Frequency Domain ◽  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Real Sector ◽  
Relationship Analysis ◽  
Long Run ◽  
Short Run ◽  
The Time Domain

AbstractSince the previous periods, poverty reduction has been a big concern for many countries especially in developing countries like Algeria; in this paper, we shall explore the causal relationship between poverty reduction, economic growth and financial development in Algeria during the period of 1970-2017, the aim of this research is to answer the question which sector causes the poverty reduction: real sector or financial sector? Therefore, we employed the modern frequency domain causality presented by Breitung and Candelon (2006) with a comparison with the time domain causality under Lutkepohl (2006) procedure, the results suggest that there is unidirectional causality running from the real sector (economic growth) to poverty rates in the short and long run terms, also, we found that there is an unidirectional causality running from the financial sector to poverty rates only in the long run term, while another causality running from poverty rates to the financial sector but in the short run term. This article aims at contributing to enlarge the literature review by utilizing the frequency domain causality in the field of poverty studies because of its effectiveness to test the causalities in different frequencies.

scholarly journals Post-Keynesian Empirical Research and the Debate on Financial Market Development

2014 ◽  
pp. 1-13
Keyword(s):  
Economic Growth ◽  
Empirical Research ◽  
Financial Development ◽  
Financial Market ◽  
Financial Sector ◽  
Market Development ◽  
Real Sector ◽  
Economic Activities ◽  
Financial Market Development

Literature suggests that financial intermediation affects growth through various channels. The questions, however, are “Whether financial development affects real economic activities?” and “Does the structure of the financial system matter for the economic growth outcome?” The aim of this chapter is, therefore, to briefly describe the concept of financial market development by highlighting the important role of the financial sector in the development of the real sector. Later in the chapter, the scope of the book is discussed, and research objectives are identified.

scholarly journals Inflation and Financial Sector Performance: The Case of Nigeria

2014 ◽  
Vol 7 (1) ◽  
pp. 55-69 ◽  
Author(s):  
R. Santos Alimi
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Sector ◽  
Macroeconomic Performance ◽  
Financial Sector Development ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
Sector Performance ◽  
Definition Of

Abstract The paper examines the long run and short run relationships between inflation and the financial sector development in Nigeria over the period between 1970 and 2012. Three variables, namely; broad definition of money as ratio of GDP, quasi money as share of GDP and credit to private sector as share of GDP, were used to proxy financial sector development. Our findings suggest that inflation presented deleterious effects on financial development over the study period. The main implication of the results is that poor macroeconomic performance has deleterious effects to financial development - a variable that is important for affecting economic growth and income inequality. Moreover, we observed a negative effect of the measures of financial development on growth, suggesting that impact of inflation on the economic growth passes through financial sector. Therefore, low and stable prices, is a necessary first step to achieving a deeper and more active financial sector that will enhance growth as predicted by Schumpeter.

scholarly journals Petroleum Consumption and Financial Development in Malaysia

2016 ◽  
Author(s):  
Jen-Eem Chen ◽  
Yan-Ling Tan ◽  
Chin-Yu Lee ◽  
Lim-Thye Goh
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Financial Sector ◽  
Causality Test ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run

This paper aims to contribute to the existing literature by examining the dynamic relationship among petroleum consumption, financial development, economic growth and energy price. The sample of this study is based on the Malaysian annual data from 1980 to 2010. The model specification was examined in the Autoregressive Distributed Lag (ARDL) framework and the results revealed the existence of a long-run equilibrium. The findings indicated that financial development and economic growth cause a demand for energy to escalate in the long run. The Toda-Yamamoto (TYDL) non Granger-causality test provides evidence that there is unidirectional Granger-causality running from financial development and economic growth to energy consumption in the long run. This suggests that Malaysia is not an energy-dependent country. Hence, the government could implement energy conservation policies to reduce the waste of energy use. Given that development in the financial sector, and economic growth increase petroleum consumption in Malaysia, the policies pertaining to energy consumption should incorporate the development of the financial sector and economic growth of country.   Keywords: Petroleum consumption, financial development, non-renewable energy, Autoregressive Distributed Lag (ARDL), Toda-Yamamoto (TYDL) non Granger-causality test

Financial liberalization, remittances and economic growth in Nigeria (1990–2018)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bosede Victoria Kudaisi ◽  
Titus Ayobami Ojeyinka ◽  
Tolulope Temilola Osinubi
Keyword(s):  
Economic Growth ◽  
Financial Liberalization ◽  
Generalized Method Of Moments ◽  
Financial Sector ◽  
Development Aid ◽  
Financial Flows ◽  
Content Type ◽  
International Remittances ◽  
Remittance Flows

PurposeInternational remittances are an important segment of external financial flows in Nigeria, currently superseding official development aid (ODA) in terms of volume, and foreign direct investment (FDI) in terms of stability. This study is motivated by the recent increase in remittance flows in Nigeria as the highest recipient in West Africa, and the fact that the growth impact of remittances is weak within the country. The financial liberalization index developed by Chinn and Ito (2006) is employed in this study to examine the role of financial liberalization in the remittances-growth nexus in Nigeria over the period 1990–2018.Design/methodology/approachTo address the possibility of endogeneity among the variables in the model, the study employs the generalized method of moments (GMM) as a technique of analysis.FindingsRemittances and financial liberalization are found to have negative significant impacts on economic growth. However, the effect of the interaction term of financial liberalization and remittances on economic growth is positive and significant. This suggests that the two variables act as complements in the enhancement of economic growth in Nigeria. The study thus concludes that financial liberalization is a strong transmission channel through which remittance inflows positively affect economic growth in Nigeria. The study also advocates for a well-developed financial sector in order to attract more growth-enhancing remittances into the country.Research limitations/implicationsThe implication of the research findings is that an unrestrained financial sector is necessary to encourage and optimize the benefits of remittance flows on economic growth in Nigeria.Originality/valuePrevious studies have considered the effects of financial development on the remittances-growth nexus in Nigeria. However, this study examines the role of financial liberalization in the nexus between remittances and economic growth in Nigeria by using the Chinn and Ito (2008) index of financial openness.

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