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Does Corruption Increase Financial Development? A Time Series Analysis in Pakistan

Muhammad, Shahbaz and Qazi, Muhammad Adnan Hye and Muhammad, Shahbaz Shabbir (2011): Does Corruption Increase Financial Development? A Time Series Analysis in Pakistan.

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Abstract

The aim of present paper is to investigate the effect of corruption on financial development in Pakistan by using ARDL bounds testing approach to cointegration. The direction of causal relationship between the variables is examined by using VECM granger causality approach. Our empirical findings indicate that corruption promotes financial development. Causality analysis reveals that corruption and financial development are complementary.

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