Causal relationship between financial depth and economic growth: evidence from Asia-Pacific Countries

M. Sani, Nur Fatin Najwa and Ismail, Fathiyah and W. Mahmood, Wan Mansor (2014): Causal relationship between financial depth and economic growth: evidence from Asia-Pacific Countries.

Abstract

This study investigates the causality between financial depth and the economic performance of five selected large Asia-Pacific Countries consisting of China, India, Korea, Australia and New Zealand. Using pooled OLS regression for 20 year period annual data (1991-2012), the study finds bi-directional long-run causality between financial depth and economic growth. The study also find that ancillary variables such as inflation and investment share significant and positively caused economic growth. However, when financial depth become dependent variable only investment share provide clear relationship. The important implication for policy maker is that they should either improved financial markets or economic activities for future development and sustainability.

• Item Type: MPRA Paper
• Language: English
• Keywords: : Economic growth, financial depth, investment share, inflation, Asia- Pacific Countries
• Subjects: G - Financial Economics > G1 - General Financial Markets; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy

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