Financial development and long-run volatility trends

This study aimed to evaluate the association of financial development and economic growth by considering the case of 10 Asian countries. The study used quantitative research design where the preliminary testing was conducted using descriptive statistics and unit root testing. The sample size comprised of 10 emerging Asian countries (India, China, Malaysia, Philippines, Pakistan, Thailand, Singapore, Bhutan, Vietnam, and Bangladesh) and the time-frame for the study was 1990 to 2018. The main techniques of analysis were Pedroni cointegration, dynamic panel least squares (DOLS) and Granger Causality. This study concluded that long-run equilibrium existed between financial development and economic growth. The research was limited to the case of Asian countries, therefore, in future, the evaluation of European countries can be conducted or African region can also be undertaken into consideration.

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The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

African Journal of Economic and Management Studies ◽

10.1108/ajems-06-2021-0291 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Siphe-okuhle Fakudze ◽

Asrat Tsegaye ◽

Kin Sibanda

Keyword(s):

Economic Growth ◽

Granger Causality ◽

Financial Development ◽

Granger Causality Test ◽

Causality Test ◽

Content Type ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

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Foreign Capital, Natural Resource Rents and Financial Development: A New Approach

Global Business Review ◽

10.1177/0972150920961364 ◽

2020 ◽

pp. 097215092096136

Author(s):

Muhammad Shahbaz ◽

Mohammad Ali Aboutorabi ◽

Farzaneh Ahmadian Yazdi

Keyword(s):

Financial Development ◽

Natural Resource ◽

Capital Accumulation ◽

Foreign Capital ◽

New Approach ◽

Resource Rents ◽

Long Run ◽

Natural Resource Rents ◽

Rich Countries ◽

The Impact

This article explores the impact of financial development on the ‘natural resources rents–foreign capital accumulation nexus’ in selected natural resource–rich countries during 1970Q1–2016Q4. In doing so, we propose a new approach by applying the autoregressive distributed lag (ARDL) rolling regression technique for our empirical purpose. The results show that financial development has a positive and significant effect on the way natural resource rents affect foreign capital in the case of Australia, Chile, Ecuador, Egypt and Peru in both the short run and the long run. We achieve the same results in the case of Colombia and Iran too, but just in the long run. Also, short-term and long-term negative effects of financial development on the rents–foreign capital nexus are witnessed just in the case of Algeria. We provide some empirical evidence for further robustness of our findings. Finally, we suggest that there is a necessity for the development of the financial system in natural resource–rich countries to reach higher levels of foreign capital, which has a crucial role in their economic growth.

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Foreign Direct Investment, Financial Development and Economic Growth Evidence from Saudi Arabia

International Journal of Financial Research ◽

10.5430/ijfr.v8n4p228 ◽

2017 ◽

Vol 8 (4) ◽

pp. 228 ◽

Cited By ~ 1

Author(s):

Najeeb Muhammad Nasir ◽

Mohammed Ziaur Rehman ◽

Nasir Ali

Keyword(s):

Economic Growth ◽

Foreign Direct Investment ◽

Financial Development ◽

Direct Investment ◽

Impulse Response Function ◽

Saudi Arabian ◽

Causality Test ◽

Long Run ◽

Oil Resources ◽

Integration Test

This study is an effort to explain and establish a relationship among foreign direct investment, financial development and economic growth in Saudi Arabian context for the period of 1970 to 2015 by employing Vector Auto Regression (VAR) and modified Granger Casualty Models. The result of Johansen co-integration test illustrates that no long run co-integration can be established among the variables. VAR has established a link between economic growth, financial development and foreign direct investment. The Granger causality test also confirms that economic growth causes foreign direct investment and financial development which is a unidirectional causality running from economic growth towards foreign direct investment and financial development. No significant causality can be observed empirically between foreign direct investment and financial development. This feature can be attributed to the fact that Saudi Arabian economy is still heavily dependent on its oil resources which is the driving force behind growth. Impulse Response Function has been utilized in order to observe the response to the shocks among the variables.

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The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽

10.3390/economies9040174 ◽

2021 ◽

Vol 9 (4) ◽

pp. 174

Author(s):

Khalid Eltayeb Elfaki ◽

Rossanto Dwi Handoyo ◽

Kabiru Hannafi Ibrahim

Keyword(s):

Economic Growth ◽

Energy Consumption ◽

Least Squares ◽

Financial Development ◽

Correction Term ◽

Trade Openness ◽

Ordinary Least Squares ◽

Distributed Lag ◽

Long Run ◽

The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

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Do Migrant Remittances Spur Financial Development in Pakistan?evidence From Linear and Nonlinear Ardl Approach

Review of Economics and Development Studies ◽

10.26710/reads.v5i4.905 ◽

2020 ◽

Vol 5 (4) ◽

Cited By ~ 1

Author(s):

Muhammad Faheem ◽

Azali Mohamed ◽

Fatima Farooq ◽

Sajid Ali

Keyword(s):

Financial Development ◽

Asymmetric Effect ◽

Distributed Lag ◽

Nonlinear Ardl ◽

Real Gdp ◽

Long Run ◽

Potential Gain ◽

Ardl Approach ◽

Migrant Remittances ◽

Bound Test

The study asseses the influence of migrant remittances on financial development over the period of 1976-2018 in Pakistan. This study has applied the linear autoregressive distributive lag (ARDL) model and nonlinear autoregressie distributed lag (NARDL) model to check the symmetric and asymmetric effect of remittances. Results of the ARDL and NARDL bound test confirm remittances, FDI, real GDP and inflation significantly contributing to financial development. The outcomes of ARDL and NARDL have also confirmed the significant positive effect of migrant remittances on financial development in long-run. The asymmetric ARDL results show the existence of remittances nonlinear effect on financial development. Specifically, the study found remittances decrease have a significant impact while remittances increase have no any significant effect on financial development. Based on findings, this study recommends the plan for the policymakers of recipient countries, especially Pakistan, could harvest the potential gain of migrant remittances though positive asymmetric association with financial sector development.

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Asymmetric effect of financial development and remittance on economic growth in MINT economies: an application of panel NARDL

Future Business Journal ◽

10.1186/s43093-021-00085-6 ◽

2021 ◽

Vol 7 (1) ◽

Author(s):

Jamiu Adetola Odugbesan ◽

Tomiwa Adebayo Sunday ◽

Gbolahan Olowu

Keyword(s):

Economic Growth ◽

Financial Development ◽

The Novel ◽

Asymmetric Effect ◽

Panel Ardl ◽

Nonlinear Ardl ◽

Long Run ◽

Asymmetric Impact ◽

The Empirical Analysis ◽

Negative Shock

AbstractThe empirical analysis examines the asymmetric effect of financial development and remittance on economic growth in MINT nations (Mexico, Indonesia, Nigeria, and Turkey). The present study utilized panel data covering the period from 1980 to 2019. The research objectives are to address the questions: (a) Is there a long-run association between economic growth and the regressors? (b) Do financial development and remittance trigger MINT nations' economic growth? Moreover, the present study applied both linear panel ARDL and the novel panel nonlinear ARDL to capture the asymmetric impact of development and remittance on economic growth. The outcomes of the linear ARDL disclosed that both financial development and remittance triggers economic growth positively. Furthermore, the outcomes of the NARDL disclosed that both positive and negative shocks in financial development increase economic growth. In addition, a positive and negative shock in remittance increases economic growth in the long-run.

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The Impact of Financial Development On The Clean Energy Transition In MENA Region: The Role of Institutional And Political Factors.

10.21203/rs.3.rs-1090260/v1 ◽

2021 ◽

Author(s):

Haifa Saadaoui

Keyword(s):

Renewable Energy ◽

Financial Development ◽

Energy Transition ◽

Transition Process ◽

Clean Energy ◽

Mena Region ◽

Political Factors ◽

Long Run ◽

The Impact

Abstract This study focuses on the role of institutional factors as well as financial development in renewable energy transition in Middle East and North Africa (MENA) region over the period 1990-2018 using the ARDL PMG method. The investigation of long-run and short-run analysis confirms that institutional and political factors play a key role in promoting the transition to renewable energy, and shows that improving these factors can lead to decarbonization of the energy sector in the long run. Another important finding is that global financial development does not have a significant effect on the transition process in the long run, implying that the whole financial system needs a fundamental structural change to accelerate the substitution between polluting and clean energies. However, in the short term, the impact appears to be negative and significant, highlighting the inadequacy of financial institutions and financial markets in promoting the region’s sustainable path. Moreover, income drives the transition to renewable energy in both short and long term. The causality results show that both financial development and institutional quality lead to renewable energy transition, while there is a bidirectional link between income and renewable energy.This study can provide a very useful recommendation to promote a clean transition in the MENA region.

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