Financial Innovation and Economic Growth

2006 ◽  
pp. 52-70
Author(s):  
Anita Ghatak
Keyword(s):  
Economic Growth ◽  
20Th Century ◽  
Financial Development ◽  
Time Series Data ◽  
Financial Innovation ◽  
Series Data ◽  
Money Stock ◽  
Long Run ◽  
Money Holding ◽  
The Uk

In this chapter, we assess the contribution of financial development to saving and economic growth in the UK in the 20th century. Financial development in this century has been by leaps and bounds along with a number of infamous crashes like the ones in the 1920s and in 1987. Using annual time-series data for the whole century, we find that financial growth has helped saving and economic growth in the UK throughout the 20th century. The unprecedented increase in money holding in 1965 and various forms of financial innovation and liberalisation initiated in the 1980s raised both the level and the rate of economic growth. Money-stock elasticity of GDP has been positive and statistically significant. There are long-run and unique co-integrated relations of GDP with productivity of capital and financial depth in the 20th century. The financial crash of Black Monday in 1987 upset equilibrium relations and led to a negative money-stock elasticity of economic growth.

scholarly journals Financial innovation and economic growth: evidence from Zimbabwe

2016 ◽  
Vol 13 (2) ◽  
pp. 65-75 ◽  
Author(s):  
Alex Bara ◽  
Calvin Mudzingiri
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Time Series Data ◽  
Financial Time Series ◽  
Financial Innovation ◽  
Dark Side ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Causality Tests

The role of financial innovation on economic growth in developing countries has not been actively pursued. Stemming from the finance-growth nexus, literature suggests that financial innovation has a relationship to growth, which could be either positive or negative. Implicitly, financial innovation has a good and a dark side that affects growth. This study establishes the causal relationship between financial innovation and economic growth in Zimbabwe empirically. Using the Autoregressive Distributed Lag (ARDL) bounds tests and Granger causality tests on financial time series data of Zimbabwe for the period 1980-2013, the study finds that financial innovation has a relationship to economic growth that varies depending on the variable used to measure financial innovation. A long-run, growth-driven financial innovationis confirmed, with causality running from economic growth to financial innovation. Bi-directional causality also exists after conditionally netting-off financial development. Policies that enhance economic growth inter-twined with financial innovation are essential, if developing countries, such as Zimbabwe, aim to maximize economic development

The Role of Financial Development in Economic Growth of Nepal: ARDL Approach of Cointegration with Structural Break Analysis

2020 ◽  
Vol 3 (4) ◽  
Author(s):  
Ramesh C. Paudel ◽  
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Financial Institution ◽  
Structural Break ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Ardl Approach

This paper, using the most recent index of financial development as developed in Svirydzenka (2016), examines the role of financial development in the economic growth of Nepal. This paper employs the Autoregressive distributed lag (ARDL) approach of cointegration with the structural break in time series data for the period of 1980-2017. Nepal is a unique country with a population of about 30 million with high demographic dividend and big markets in the neighbours, the earlier entrant in the liberalization and reform in the region, endowed with lots of natural resources and beauties, and comparatively cheaper labor force in the region but it remains as one of the poor landlocked developing countries sandwiched between two emerging economies, namely China and India. The results show that financial development has a strong long-run positive relationship with economic growth. Therefore, developing the strategies for the proper financial development improving the financial institution quality and widening the financial market to improve capital formation would be a way to accelerate the economic growth in Nepal.

scholarly journals Financial Development and Stock Traded Contributions towards Economic Growth

2015 ◽  
Vol 2 (1) ◽  
pp. 5-8
Author(s):  
Shehper Maryam Zafar ◽  
Nadia Bukhari
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Financial Development ◽  
Positive Relationship ◽  
Time Series Data ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
Long Term Impact

This purpose of this research is check the long run as well as short run impact of Financial Development and Stock traded on the economic growth in the scenario of Pakistan. The time series data has taken for the year 1988-2013. This paper utilized ARDL methodology to determine long-term impact of Financial Development and Stock Traded on Economic growth. Further Granger Causality Check has used to check a uni-directional relationship. The results of this test support that FD and stock traded has a uni-directional impact over economic growth. Further, it has depicted from ARDL that there is a positive relationship between FD and Economic Growth as well as Stock Traded and Economic Growth.

scholarly journals ISLAMIC FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA: A BOUNDS TESTING APPROACH

2020 ◽  
Vol 6 (3) ◽  
Author(s):  
Tasiu Tijjani Sabiu ◽  
Muhammad Abduh
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Correction Method ◽  
Series Data ◽  
Bounds Testing ◽  
Bank Financing ◽  
Long Run ◽  
Bounds Testing Approach ◽  
Testing Approach

Using a bounds testing approach to the cointegration and error correction method developed within the autoregressive distributed lag (ARDL) framework, this paper analyses the short- and long-run dynamic relationships between Islamic financial development and economic growth in Nigeria. Quarterly time-series data (2012:1 to 2019:3) are employed for the variables, together with non-interest bank financing to the private sector and real gross domestic product as indicators of Islamic financial development and economic growth respectively. The results indicate a significant short- and long-run relationship between Islamic financial development and economic growth. The relationship, however, is neither Schumpeter’s supply-leading nor Robinson’s demand-following type; rather, it appears to be bi-directional. In addition, empirical evidence is found that underscores the important role of Islamic bank financing in the economic performance of Nigeria. The paper recommends that improvement of the Islamic financial system in Nigeria may foster economic development and enhance welfare and poverty alleviation in the long run.

scholarly journals The Impact of Saving and Financial Development on Economic Growth in Turkey

2019 ◽  
Vol 11 (2) ◽  
pp. 1
Author(s):  
Hatem Hatef Abdulkadhim Altaee ◽  
Mohamed Khaled Al-Jafari
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Series Data ◽  
Domestic Saving ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

Since saving and financial development are vital to economic growth, this research empirically investigates the impact of saving and financial development on economic growth in Turkey. Therefore, a time series data from 1968 until 2017 were tested utilizing both the error correction model (ECM) and the autoregressive distributed lag approach (ARDL). The findings reveal an existence of a short-run and a long-run positive and significant effect of savings and financial development on economic growth. Conventional inputs such as capital and labor proved to be the most important factors in achieving economic growth in Turkey. The study concludes that an appropriate policy mix will enhance domestic saving in the country.

scholarly journals Financial Development and Economic Growth in Nepal: An ARDL Bound Test Approach

2021 ◽  
Author(s):  
Pradeep Panthi
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Series Data ◽  
Reverse Causality ◽  
Distributed Lag ◽  
Dynamic Relationship ◽  
Long Run ◽  
Domestic Credit ◽  
Bound Test

Abstract This study empirically examines the dynamic relationship between financial development and economic growth in Nepal using annual time series data from 1985 to 2016. The financial development is measured by domestic credit to the private sectors, domestic credit to the private sectors by banks, broad money (M2) and net domestic credit, separately. All are ratios to GDP. The economic growth is measured by real GDP per capita. The bound test approach of cointegration under autoregressive distributed lag (ARDL) model reveals that Nepal’s financial development and economic growth are cointegrated with bi-directional causality in the long-run. Thus, the study concludes that financial development and economic growth positively and significantly impact each other. The causal effects running from financial development to economic growth are portent then economic growth to financial development. However, the speed of adjustment towards long-run equilibrium, directing from economic growth to financial development is reasonably robust. There is one-directional reverse causality running from economic growth to financial development in the short-run. Therefore, the study suggests policymakers to prioritize policies to develop a well-functioning financial sector to enhance economic growth, especially for developing countries like Nepal.JEL ClassificationsG21, C22, F43, O11, O16

scholarly journals Analysis of FDI and Financial improvements for the Economic growth

2017 ◽  
Vol 4 (1) ◽  
pp. 29-32
Author(s):  
Nadia Bukhari ◽  
Atiq ul Rahman Malik
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Financial Development ◽  
Positive Relationship ◽  
Time Series Data ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
Long Term Impact

This study is conducted in order to check the long run as well as short run impact of FDI and Financial Development on the economic growth. The study is conducted in the scenario of Pakistan and the time series data is taken for the year 1972-2013. ARDL methodology is used to determine whether FDI has long-term impact on Economic growth or not. Moreover, Granger Causality is used to check a uni-directional relationship and the results support that FDI has an impact over economic growth. Further, it is depicted from ARDL that there is a positive relationship between FDI and Economic Growth.

scholarly journals EXAMINING THE FINANCE- GROWTH NEXUS IN CAMEROON USING COINTEGRATION APPROACH

2020 ◽  
Vol 4 (2) ◽  
Author(s):  
Achamoh Ngimanang
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Relevant Literature ◽  
Empirical Relationship ◽  
Series Data ◽  
Unique Contribution ◽  
Real Gdp ◽  
Long Run ◽  
Short Run

Purpose: This study explores the empirical relationship between growth rate of real GDP and financial development using Cameroons time series data spanning from 1978 to 2017.  Methodology: After shedding light to the evolution of financial development in Cameroon and exploring some relevant literature, the study assesses the finance-growth linkages in Cameroon by specifying and estimating the long run and short run functions for financial development using cointegration and Error Correction modeling (ECM) techniques in addition to Engle and Granger causality testing.   Findings: Growth of real GDP used in this paper to capture economic growth was reported to have a positive and highly significant relationship with the variable for financial development and the relation was more significant in the short run than in the long run after controlling for other variables. Bidirectional causality was also noticed between the two set of variables. Unique contribution to theory, practice and policy: Results of this paper suggests that financial sector of Cameroon can efficiently allocate credit to the private sector as an indicator of financial development by stimulating economic activities with the aim of raising gross domestic product of the country in both short and long run. Keywords: Economic growth, financial development, cointegration, Cameroon

Fish Exports and Economic Growth: The Pakistan’s Experience

2019 ◽  
Vol 20 (2) ◽  
pp. 279-296 ◽  
Author(s):  
Syed Tehseen Jawaid ◽  
Mohammad Haris Siddiqui ◽  
Zeeshan Atiq ◽  
Usman Azhar
Keyword(s):  
Economic Growth ◽  
Time Series Data ◽  
Positive Impact ◽  
Impulse Response Function ◽  
Policy Implications ◽  
Sensitivity Analyses ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This study attempts to explore first time ever the relationship between fish exports and economic growth of Pakistan by employing annual time series data for the period 1974–2013. Autoregressive distributed lag and Johansen and Juselius cointegration results confirm the existence of a positive long-run relationship among the variables. Further, the error correction model reveals that no immediate or short-run relationship exists between fish exports and economic growth. Different sensitivity analyses indicate that initial results are robust. Rolling window analysis has been applied to identify the yearly behaviour of fish exports, and it remains negative from 1979 to 1982, 1984 to 1988, 1993 to 1999, 2004 and from 2010 to 2013, and it shows positive impact from 1989 to 1992, 2000 to 2003 and from 2005 to 2009. Furthermore, the variance decomposition method and impulse response function suggest the bidirectional causal relationship between fish exports and economic growth. The findings are beneficial for policymakers in the area of export planning. This study also provides some policy implications in the final section.

scholarly journals Non-bank financial institutions and economic growth: Evidence from Africa’s three largest economies

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Ronald Rateiwa ◽  
Meshach J. Aziakpono
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Financial Institutions ◽  
Time Series Data ◽  
Bank Lending ◽  
Series Data ◽  
The Sustainable Development ◽  
Long Run ◽  
The Relationship

Background: In order for the post-2015 world development agenda – termed the sustainable development goals (SDGs) – to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth.Aim: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof.Setting: The empirical assessment uses time-series data from Africa’s three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971–2013.Methods: This article uses the Johansen cointegration and vector error correction model within a country-specific setting.Results: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed.Conclusion: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth.

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