Economic growth and the development of banking and insurance sector in the post-liberalized India

2017 ◽  
Vol 44 (12) ◽  
pp. 2187-2207 ◽  
Author(s):  
Shrutikeerti Kaushal ◽  
Amlan Ghosh
Keyword(s):  
Economic Growth ◽  
Causality Test ◽  
Data Set ◽  
Content Type ◽  
Vector Error Correction ◽  
Insurance Sector ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Banking Development

Purpose The importance of banking and insurance, as an important part of the financial system, has been well accepted in the growth literature. Acting as financial intermediaries they perform important functions that may contribute in economic growth. Addressing this issue, the purpose of this paper is to empirically examine the relationship between banking, insurance and economic growth in India in the post-liberalized era when the private sector was allowed to operate banking and insurance business. Design/methodology/approach In order to find the long-run and short-run relationship between banking, insurance and economic growth, the study uses the VAR-vector error correction model (VECM) along with Granger causality test to explore any causal relationship. Findings The results indicate that there is the long-term relationship between banking, insurance and economic growth and the causality results show a bi-directional relationship between insurance activity and economic growth; however, banking is not granger cause of insurance or economic growth rather it is economic growth that cause banking development. Research limitations/implications The only limitation to the study is the non-availability of monthly figures of GDP. The study therefore, as suggested by RBI, uses monthly data set of Index of Industrial Production to measure economic growth. Practical implications The findings of the study give policy directions to the policymakers to make strategies that are conducive toward boosting development in insurance in order to achieve the targeted economic growth. Originality/value This work is the first attempt to study the conjoint relationship between banking, insurance and economic growth on the Indian economy after the reforms were initiated in the financial sector.

THE CAUSAL RELATIONSHIP BETWEEN INSURANCE AND ECONOMIC GROWTH IN NIGERIA (1986-2010)

2012 ◽  
Vol 02 (12) ◽  
pp. 49-57
Author(s):  
TAIWO AKINLO
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Causal Relationship ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run

This study examined the causal relationship between insurance and economic growth in Nigeria over the period 1986-2010. The Vector Error Correction model (VECM) was adopted. The cointegration test shows that GDP, premium, inflation and interest rate are cointegrated when GDP is the edogeneous variable. The granger causality test reveals that there is no causality between economic growth and premium in short run while premum, inflation and interest rate Granger cause GDP in the long run which means there is unidirectional causality running from premium, inflation and interest rate to GDP. This means insurance contributes to economic growth in Nigeria as they provide the necessary long-term fund for investment and absolving risks.

scholarly journals Export Diversification and Economic Growth in the United Arab Emirates: An Empirical Investigation

2020 ◽  
Author(s):  
SAIMA SHADAB
Keyword(s):  
Economic Growth ◽  
United Arab Emirates ◽  
Export Diversification ◽  
Test Results ◽  
Causality Test ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run

Abstract Using the Vector Error Correction Model and Toda-Yamamoto Causality approach, this paper investigates the short-run and long-run relationship between export diversification, physical and human capital, imports, and economic growth in the UAE. The study period in consideration is 1975-2017. The findings obtained from the VECM test confirm the existence of a significant long-run relationship between export diversification, imports, and economic growth in the UAE. Besides, the Toda Yamamoto Granger Causality test results reveal that imports Granger-cause UAE’s economic growth which proves the validity of the Import-Led Growth hypothesis for the UAE economy in the long-run. The results also confirm that a unidirectional causal relationship exists from export diversification to economic growth for the UAE. This finding indicates the success of the UAE economy in attaining economic diversification and reduction from oil-dependency.

scholarly journals Zakat Distribution and Growth in the Federal Territory of Malaysia

2012 ◽  
Vol 4 (8) ◽  
pp. 449-456
Author(s):  
Mohammed B. Yusoff
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Causality Test ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Cointegration Tests ◽  
Causality Tests ◽  
Short Run ◽  
The Impact

This research paper aims to examine the impact of zakat distribution on growth in the Federal Territory Malaysia. Specifically, an econometric study is carried out to examine the ability of zakat expenditure to affect real economic growth in the Federal Territory Malaysia by employing various econometric procedures such as the unit root tests, the cointegration tests, the vector error-correction model (VECM), and the Granger causality tests. The findings of the study suggest that zakat expenditure has a positive relationship with real GDP in the long-run. The Granger causality test indicates that zakat spending causes real economic growth with no feedback. In other words, zakat expenditure could boost GDP in the Federal Territory Malaysia both in the short-run and long-run.

Attaining economic growth through financial development and foreign direct investment

2019 ◽  
Vol 46 (6) ◽  
pp. 1201-1223 ◽  
Author(s):  
Rudra Pradhan ◽  
Mak B. Arvin ◽  
Sahar Bahmani ◽  
John H. Hall
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Content Type ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Financial Infrastructure ◽  
Short Run

Purpose The purpose of this paper is to consider the heterogeneous relationship among financial development, foreign direct investment (FDI) and economic growth, examining the possible directions of causality among them in both the short and long runs. Design/methodology/approach A sample of the G-20 countries over the period 1970–2016 is utilized. A vector error-correction model is used to consider the possible directions of causality among financial development, FDI and economic growth. Findings Results suggest a cointegrating relationship among the three series. Although short-run links among the variables are mostly non-uniform, both financial development and FDI matter in the determination of long-run economic growth. Practical implications Attention must be paid to policies that promote financial development. This, in turn, calls for fostering incentives to guarantee continued support to liberalize the economy and promoting capital openness. Additionally, financial infrastructure should be improved to improve financial innovation. The establishment of a well-developed financial market, including well-functioning banks and other financial institutions, can facilitate further investment and an easier means of raising capital to support the activities of FDI. Economic growth can ultimately be elevated through both financial development and FDI. Originality/value The study considers a sample of the G-20 countries, which have received relatively little attention in the existing literature. In addition, the study concurrently analyses the trivariate causal relationship among financial development, FDI and economic growth, a topic on which there has been a dearth of research.

Enhancing Economic Growth and Government Revenue Generation in Nigeria: The Role of Diaspora Remittances

2021 ◽  
pp. 003464462110256
Author(s):  
Dal Didia ◽  
Suleiman Tahir
Keyword(s):  
Economic Growth ◽  
Parameter Estimates ◽  
Gross Domestic Product Growth ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
The Empirical Analysis

Even though remittances constitute the second-largest source of foreign exchange for Nigeria, with a $24 billion inflow in 2018, its impact on economic growth remains unclear. This study, therefore, examined the short-run and long-run impact of remittances on the economic growth of Nigeria using the vector error correction model. Utilizing World Bank data covering 1990–2018, the empirical analysis revealed that remittances hurt economic growth in the short run while having no impact on economic growth in the long run. Our parameter estimates indicate that a 1% increase in remittances would result in a 0.9% decrease in the gross domestic product growth rate in the short run. One policy implication of this study is that Nigeria needs to devise policies and interventions that minimize the emigration of skilled professionals rather than depending on remittances that do not offset the losses to the economy due to brain drain.

Does educational progress impact energy consumption? A causality test for India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Soumen Rej ◽  
Barnali Nag
Keyword(s):  
Energy Consumption ◽  
Energy Supply ◽  
Causality Test ◽  
Content Type ◽  
Vector Error Correction ◽  
Educational Advancement ◽  
Long Run ◽  
Short Run ◽  
Development Goals ◽  
Per Capita

Purpose Both energy and education have been positioned as priority objectives under the itinerary of UN development goals. Hence, it is necessary to address the implicit inter relationship between these two development goals in the context of developing nations such as India who are trying to grow in both per capita income and socio economic factors whilst struggling with the challenges of a severe energy supply constrained economy. Design/methodology/approach In the present study, the causal relationship between energy consumption per capita and education index (EI) as a proxy of educational advancement is investigated for India for 1990–2016 using the Johansen-Juselius cointegration test and vector error correction model. Findings The empirical results infer although energy consumption per capita and EI lack short run causality in either direction, existence of unidirectional long run causality from EI to per capita energy consumption is found for India. Further, it is observed that energy consumption per capita takes around four years to respond to unit shock in EI. Research limitations/implications The findings from this study imply that with the advancement of education, a rise in per capita energy consumption requirement can be foreseen on the demand side, and hence, India’s energy policy needs to emphasize further its sustainable energy supply goals to meet this additional demand coming from a population with better education facilities. Originality/value The authors hereby confirm that this manuscript is entirely their own original study and not submitted elsewhere.

Innovation, ICT penetration, trade and economic growth in developing and developed countries: a VECM approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Parul Singh ◽  
Areej Aftab Siddiqui
Keyword(s):  
Economic Growth ◽  
Error Correction ◽  
Developing Nations ◽  
Vector Error Correction Model ◽  
Correction Model ◽  
Content Type ◽  
Vector Error Correction ◽  
Vector Error ◽  
Short Run ◽  
Developed Nations

Purpose The development in information communication and technology (ICT) has led to many changes such as reorganization of economics, globalization and trade. With more innovation processes being organized and adopted across technologies, trade, etc., these are getting more closely related and needs fresh research perspective. This study aims to empirically investigate the interrelationship between ICT penetration, innovation, trade and economic growth in 20 developed and developing nations from 1995 to 2018. Design/methodology/approach The present paper examines both long-run and short-run relationships between the four variables, namely, innovation, ICT penetration, trade and economic growth, by applying panel estimation techniques of regression and vector error correction model. ICT penetration and innovation indices are constructed using principle component analysis technique. Findings The findings of the study highlight that for developed nations, growth, trade and innovation are significantly interlinked with no significant role of ICT penetration While for developing nations, significant relationship is present between growth and trade, ICT penetration and innovation. With respect to trade, in case of developed nations, significant relationship is present with ICT penetration. While for developing nations there is no significant result for trade promotion. On further employing the vector error correction model, the presence of short run causality between growth, trade and innovation in case of developed nations is established but no such causality between variables for developing nations is seen. Originality/value The present paper adds to the existing strand of literature examining interlinkage between innovation and growth by introducing new variables of ICT penetration and innovation.

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

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.

Public debt, corruption and shadow economy in Africa: an empirical analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Victor Owusu-Nantwi ◽  
Gloria Owusu-Nantwi
Keyword(s):  
Public Debt ◽  
Shadow Economy ◽  
African Countries ◽  
Correction Model ◽  
Content Type ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Policies And Programs

PurposeThe purpose of this paper is to examine the effect of corruption and shadow economy on public debt in 51 African countries. In addition, the study explores the causal linkage between corruption, shadow economy and public debt.Design/methodology/approachThe study employs vector error correction model and Kao cointegration test to examine the long-run relationship between corruption, shadow economy and public debt in Africa.FindingsThe study finds a positive and statistically significant relationship between corruption and public debt. Further, the study reports a positive and statistically significant effect of shadow economy on public debt. In the short run, the study finds a unidirectional causal relationship between corruption, shadow economy and public debt with the direction of causality running from corruption and shadow economy to public debt, respectively.Practical implicationsThis study recommends that countries should pursue policies and programs that would provide resources to agencies tasked with the responsibility of fighting corruption. This would ensure that countries have effective institutions that curb vulnerabilities to corruption and reduce the size of the shadow economy and public debt.Originality/valueThis study contributes to the literature by showing how corruption and shadow economy affects public debts of African countries. To the best of the author's knowledge, this is the first attempt to examine this relationship in the context of Africa.

Does transportation infrastructure impact economic growth in India?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sreenu Nenavath
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Positive Impact ◽  
Transport Infrastructure ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
Short Run ◽  
The Government ◽  
Determinants Of Economic Growth

Purpose This paper aims to show a long run and causal association between economic growth and transport infrastructure. Design/methodology/approach In this study, the authors use ARDL models through the period 1990 – 2020 to investigate the relationship between transport infrastructure and economic growth in India. Findings The infrastructure has a positive impact on economic growth in India for the long run. Moreover, Granger causality test demonstrates a unidirectional relationship between transport infrastructure to economic development. Stimulatingly, the paper highlights the effect of air infrastructure statistically insignificant on economic growth in the long and short-run period. Originality/value The original outcome from the study delivers an inclusive depiction of determinants of economic growth from transport infrastructure in India, and these findings will help the policymakers to frame policies to improve the transport infrastructure. Hence, it is proposed that the government of Indian should focus more to upsurge the transport infrastructure for higher economic development.

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