The Nexus Between Financial Development and Economic Growth in Lao PDR

Kyophilavong, Phouphet and Salah Uddin, Gazi and Shahbaz, Muhammad (2014): The Nexus Between Financial Development and Economic Growth in Lao PDR.

Abstract

The relationship between financial development and economic growth is not conclusive in existing economics literature. The aim of this paper is to test two hypotheses: ‘supply-leading’ hypothesis and ‘demand-following’ hypothesis, using Laos time series data. The ARDL bounds testing approach to cointegration is used to carry out this task. Our results confirm the presence of feedback effect between both variables. Financial development promotes economic growth and in resulting, economic growth leads financial development.

• Item Type: MPRA Paper
• Language: English
• Keywords: Finance-growth nexus, ARDL approach, Granger causality, Laos
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General

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