Effects of Financial Development and Industrial Maturity on Economic Growth
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Published:
Apr 11, 2024
Keywords:
GDP Growth, Financial Development, Industrial Development, ARDL Technique.
Main Article Content
Abstract
The study is an effort to explore the relationship between financial improvement and the economic growth of the country. In this investigation process, study captures the time series data from 1970-2013 in case of Pakistan. Autoregressive Distributed Lag model (ARDL) method is employed for the statistical findings of the mentioned variables. To establish more extensive connectivity between variables study includes part of industrial performance and government spending under consideration. Results of the exploration provide the evidence that enhancement of financial sector with maturity endorses the economic growth that is measured by Gross domestic product of per capita. Long run and short run results validate the importance of the measured variable for the economic growth. Accordingly, in policy making process strategies for the financial development, enhanced industrial performance and constructive government spending could be encouraging for country’s progress.
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How to Cite
Effects of Financial Development and Industrial Maturity on Economic Growth. (2024). Journal of Management Info, 2(1), 38-55. https://doi.org/10.31580/jmi.v5i1.33
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Research Article
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How to Cite
Effects of Financial Development and Industrial Maturity on Economic Growth. (2024). Journal of Management Info, 2(1), 38-55. https://doi.org/10.31580/jmi.v5i1.33
References
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Adnan Hye, Q. M., & Islam, F. (2013). Does financial development hamper economic growth: empirical evidence from Bangladesh. Journal of Business Economics and Management, 14(3), 558-582.
Aggarwal, R., Demirgüç-Kunt, A., & PerÃa, M. S. M. (2011). Do remittances promote financial development?. Journal of Development Economics, 96(2), 255-264.
Aghion, P., Howitt, P., & Mayer-Foulkes, D. (2005). The effect of financial development on convergence: Theory and evidence. The Quarterly Journal of Economics, 120(1), 173-222.
Ali Akkemik, K. (2005). Labor productivity and inter-sectoral reallocation of labor in Singapore (1965-2002).
Andersen,T.,&Tarp,F.(2003).Financialliberalization,financialdevelopmentandeconomicgrowthinLDCs. Journal of International Development, 15(2), 189–209.
Ang, J. B., & McKibbin, W. J. (2007). Financial liberalization, financial sector development and growth: evidence from Malaysia. Journal of Development Economics, 84(1), 215-233.
Ang, J.( 2009). CO2 emissions, research and technology transfer in China. Ecological Economics, 68 (10), 2658–2665.
Ansari, M. I. (2002). Impact of Financial development, money, and public spending on Malaysian national income: An econometric study. Journal of Asian Economics, 13, 72–93.
Anwar, S., & Cooray, A. (2012). Financial development, political rights, civil liberties and economic growth: Evidence from South Asia. Economic Modelling, 29(3), 974-981.
Anwar, S., & Nguyen, L. P. (2011). Foreign direct investment and trade: The case of Vietnam. Research in International Business and Finance, 25(1), 39-52.
Arestis, P., Demetriades, P. O., & Luintel, K. B. (2001). Financial development and economic growth: The role of stock markets. Journal of Money, Credit & Banking (Ohio State University Press), 33(1).
Asghar, N., Azim, P., & ur Rehman, H. (2011). Impact of Government Spending in Social Sectors on Economic Growth: A Case Study of Pakistan. Journal of Business & Economics, 3(2).
Aziz, J., & Duenwald, C. (2002). Growth-financial intermediation nexus in China (No. 2002-2194). International Monetary Fund.
Baltagi, B. H., Demetriades, P. O., & Law, S. H. (2009). Financial development and openness: Evidence from panel data. Journal of development economics, 89(2), 285-296.
Barbieri, E., Di Tommaso, M. R., & Bonnini, S. (2012). Industrial development policies and performances in Southern China: Beyond the specialised industrial cluster program. China Economic Review, 23(3), 613-625.
Berthélemy, J. C., & Söderling, L. (2001). The role of capital accumulation, adjustment and structural change for economic take-off: Empirical evidence from African growth episodes. World Development, 29(2), 323-343.
Boyreau-Debray, G. (2003). Financial intermediation and growth: Chinese style.
Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society. Series B (Methodological), 149-192.
Bukhari, N., Shahzadi, K., & Ahmad, M. S. (2014). Consequence of FDI on CO emissions in case of Pakistan. Middle-East Journal of Scientific Research, 20(9), 1183-1189.
Calderon, C., Chong, A., & Leon, G. (2007). Institutional enforcement, labor-market rigidities, and economic performance. Emerging Markets Review, 8(1), 38-49.
Christopoulos, D. K., & Tsionas, E. G. (2004). Financial development and economic growth: evidence from panel unit root and cointegration tests. Journal of development Economics, 73(1), 55-74.
Claessens, S., & Laeven, L. (2005). Financial dependence, banking sector competition, and economic growth. Journal of the European Economic Association, 3(1), 179-207.
Cooray, A. (2009). The Financial Sector and Economic Growth*. Economic Record, 85(s1), S10-S21.
Demetriades, P. O., & Hussein, K. A. (1996). Does financial development cause economic growth? Time-series evidence from 16 countries. Journal of development Economics, 51(2), 387-411.
Demirguc-Kunt, A., & Levine, R. (2009). Finance and inequality: Theory and evidence (No. w15275). National Bureau of Economic Research.
Dong, X., Song, S., & Zhu, H. (2011). Industrial structure and economic fluctuation—Evidence from China. The Social Science Journal, 48(3), 468-477.
Fan, S., & Rao, N. (2003). Public spending in developing countries: trends, determination, and impact. International food policy research institute (IFPRI). Environment and production technology division.
Favarra, G. (2003). An empirical reassessment of the relationship between finance and growth. International Monetary Fund.
Friedl, B., & Getzner, M. (2003). Determinants of CO2 emissions in a small open economy. Ecological Economics, 45(1), 133-148.
Fung, M. K. (2009). Financial development and economic growth: convergence or divergence?. Journal of International Money and Finance, 28(1), 56-67.
Goldsmith, R. W. (1969). Financial structure and development (Vol. 1, p. 969). New Haven: Yale university press.
HalicioÄlu, F. (2003). Testing Wagner's law for Turkey, 1960-2000. Review of Middle East Economics and Finance, 1(2), 129-140.
Halicioglu, F. (2009). An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37(3), 1156-1164.
Hao, C. (2006). Development of financial intermediation and economic growth: The Chinese experience. China Economic Review, 17(4), 347-362.
Herwartz, H., & Walle, Y. M. (2014). Determinants of the link between financial and economic development: Evidence from a functional coefficient model. Economic Modelling, 37, 417-427.
Hsueh, S. J., Hu, Y. H., & Tu, C. H. (2013). Economic growth and financial development in Asian countries: A bootstrap panel Granger causality analysis. Economic Modelling, 32, 294-301.
Ibrahim, M. H. (2007). The role of the financial sector in economic development: the Malaysian case. International Review of Economics, 54(4), 463-483.
Jalil, A., & Feridun, M. (2011). Impact of financial development on economic growth: empirical evidence from Pakistan. Journal of the Asia Pacific Economy, 16(1), 71-80.
Jedidia, K. B., Boujelbène, T., & Helali, K. (2014). Financial development and economic growth: New evidence from Tunisia. Journal of Policy Modeling.
Khan, A. (2014). How Does Stock Prices Respond to Various Macroeconomic Factors? A Case Study of Pakistan. Journal of Management Info, 4(1), 75-95.
Khan, M. S., & Senhadji, A. S. (2003). Financial development and economic growth: A review and new evidence. Journal of African Economies, 12(suppl 2), ii89-ii110.
Kweka, J. P., & Morrissey, O. (2000). Government spending and economic growth in Tanzania, 1965-1996. Centre for Research in Economic Development and International Trade, University of Nottingham.
Lartey, E. K. (2010). A note on the effect of financial development on economic growth. Applied Economics Letters, 17(7), 685-687.
Levine, R. (2005). Finance and growth: theory and evidence. Handbook of economic growth, 1, 865-934.
Levine, R., Loayza, N., & Beck, T. (2000). Financial intermediation and growth: Causality and causes. Journal of monetary Economics, 46(1), 31-77.
Li, Y. E. (2008). An empirical analysis of macro economic fluctuation and industry construction change. Journal of Shangdong University, 3, 21-24.
Luintel, K. B., Khan, M., Arestis, P., & Theodoridis, K. (2008). Financial structure and economic growth. Journal of Development Economics, 86(1), 181-200.
Ma, Y., & Jalil, A. (2008). Financial development, economic growth and adaptive efficiency: a comparison between China and Pakistan. China & World Economy, 16(6), 97-111.
Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach. Economic Modelling, 37, 386-394.
Misati, R. N., & Nyamongo, E. M. (2012). Financial liberalization, financial fragility and economic growth in Sub-Saharan Africa. Journal of Financial Stability, 8(3), 150-160.
Murinde, V. (2012). Financial development and economic growth: Global and African evidence. Journal of African Economies, 21(suppl 1), i10-i56.
Naceur, S. B., & Ghazouani, S. (2007). Stock markets, banks, and economic growth: Empirical evidence from the MENA region. Research in International Business and Finance, 21(2), 297-315.
Narayan, P. K., Nielsen, I., & Smyth, R. (2008). Panel data, cointegration, causality and Wagner's law: Empirical evidence from Chinese provinces. China Economic Review, 19(2), 297-307.
Nelson, R. R., & Pack, H. (1999). The Asian miracle and modern growth theory. The Economic Journal, 109(457), 416-436.
New York, NY: MacMillan (extracts from Finanzwissenschaft, Part I, Third Edition, Leipzig, 1883, pp. 4–16, 69–76).
Nieuwerburgh, S. V., Buelens, F., & Cuyvers, L. (2006). Stock market development and economic growth in Belgium. Explorations in Economic History, 43(1), 13-38.
Peacock, A., & Scott, A. (2000). The curious attraction of Wagner's law. Public Choice, 102(1-2), 1-17.
Pesaran, M. H., & Pesaran, B. (1997). Working with Microfit 4.0: interactive econometric analysis. Oxford University Press.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.
Qureshi, M. I., Rustum, A., Rustum, S., Omar, A. B., and Zaman, K. (2013). Factors Influencing Customer Satisfaction in Banking Sector of Pakistan. Report and Opinion, 5(2).
Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. American Economic Review, 88, 559–586.
Rehman, J., Iqbal, A., & Siddiqi, M. W. (2010). Cointegration-causality analysis between public expenditures and economic growth in Pakistan. European Journal of Social Sciences, 13(4), 556-565.
Roca, J., Padilla, E., Farré, M., & Galletto, V. (2001). Economic growth and atmospheric pollution in Spain: discussing the environmental Kuznets curve hypothesis. Ecological Economics, 39(1), 85-99.
Rousseau, P. L., & Wachtel, P. (2011). What is happening to the impact of financial deepening on economic growth?. Economic Inquiry, 49(1), 276-288.
Samargandi, N., Fidrmuc, J., & Ghosh, S. (2013). Financial development and economic growth in an oil-rich economy: The case of Saudi Arabia. Economics.
Silva, E. G., & Teixeira, A. A. (2008). Surveying structural change: Seminal contributions and a bibliometric account. Structural Change and Economic Dynamics, 19(4), 273-300.
Tang, T. C. (2009). Wagner's Law Versus Keynesian Hypothesis in Malaysia: An Impressionistic View. Universiteit Antwerpen. Centre for ASEAN studies (CAS).
Uddin, G. S., Sjö, B., & Shahbaz, M. (2013). The causal nexus between financial development and economic growth in Kenya. Economic Modelling, 35, 701-707.
Wagner, A. (1958). Three extracts on public finance. In R. A. Musgrave, & A. T. Peacock (Eds.), Classics in the theory of public finance (pp. 1–15).
Wynne, J. (2002). Information Capital, Firm Dynamics and Macroeconomic Performance. mimeo.
Adnan Hye, Q. M., & Islam, F. (2013). Does financial development hamper economic growth: empirical evidence from Bangladesh. Journal of Business Economics and Management, 14(3), 558-582.
Aggarwal, R., Demirgüç-Kunt, A., & PerÃa, M. S. M. (2011). Do remittances promote financial development?. Journal of Development Economics, 96(2), 255-264.
Aghion, P., Howitt, P., & Mayer-Foulkes, D. (2005). The effect of financial development on convergence: Theory and evidence. The Quarterly Journal of Economics, 120(1), 173-222.
Ali Akkemik, K. (2005). Labor productivity and inter-sectoral reallocation of labor in Singapore (1965-2002).
Andersen,T.,&Tarp,F.(2003).Financialliberalization,financialdevelopmentandeconomicgrowthinLDCs. Journal of International Development, 15(2), 189–209.
Ang, J. B., & McKibbin, W. J. (2007). Financial liberalization, financial sector development and growth: evidence from Malaysia. Journal of Development Economics, 84(1), 215-233.
Ang, J.( 2009). CO2 emissions, research and technology transfer in China. Ecological Economics, 68 (10), 2658–2665.
Ansari, M. I. (2002). Impact of Financial development, money, and public spending on Malaysian national income: An econometric study. Journal of Asian Economics, 13, 72–93.
Anwar, S., & Cooray, A. (2012). Financial development, political rights, civil liberties and economic growth: Evidence from South Asia. Economic Modelling, 29(3), 974-981.
Anwar, S., & Nguyen, L. P. (2011). Foreign direct investment and trade: The case of Vietnam. Research in International Business and Finance, 25(1), 39-52.
Arestis, P., Demetriades, P. O., & Luintel, K. B. (2001). Financial development and economic growth: The role of stock markets. Journal of Money, Credit & Banking (Ohio State University Press), 33(1).
Asghar, N., Azim, P., & ur Rehman, H. (2011). Impact of Government Spending in Social Sectors on Economic Growth: A Case Study of Pakistan. Journal of Business & Economics, 3(2).
Aziz, J., & Duenwald, C. (2002). Growth-financial intermediation nexus in China (No. 2002-2194). International Monetary Fund.
Baltagi, B. H., Demetriades, P. O., & Law, S. H. (2009). Financial development and openness: Evidence from panel data. Journal of development economics, 89(2), 285-296.
Barbieri, E., Di Tommaso, M. R., & Bonnini, S. (2012). Industrial development policies and performances in Southern China: Beyond the specialised industrial cluster program. China Economic Review, 23(3), 613-625.
Berthélemy, J. C., & Söderling, L. (2001). The role of capital accumulation, adjustment and structural change for economic take-off: Empirical evidence from African growth episodes. World Development, 29(2), 323-343.
Boyreau-Debray, G. (2003). Financial intermediation and growth: Chinese style.
Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society. Series B (Methodological), 149-192.
Bukhari, N., Shahzadi, K., & Ahmad, M. S. (2014). Consequence of FDI on CO emissions in case of Pakistan. Middle-East Journal of Scientific Research, 20(9), 1183-1189.
Calderon, C., Chong, A., & Leon, G. (2007). Institutional enforcement, labor-market rigidities, and economic performance. Emerging Markets Review, 8(1), 38-49.
Christopoulos, D. K., & Tsionas, E. G. (2004). Financial development and economic growth: evidence from panel unit root and cointegration tests. Journal of development Economics, 73(1), 55-74.
Claessens, S., & Laeven, L. (2005). Financial dependence, banking sector competition, and economic growth. Journal of the European Economic Association, 3(1), 179-207.
Cooray, A. (2009). The Financial Sector and Economic Growth*. Economic Record, 85(s1), S10-S21.
Demetriades, P. O., & Hussein, K. A. (1996). Does financial development cause economic growth? Time-series evidence from 16 countries. Journal of development Economics, 51(2), 387-411.
Demirguc-Kunt, A., & Levine, R. (2009). Finance and inequality: Theory and evidence (No. w15275). National Bureau of Economic Research.
Dong, X., Song, S., & Zhu, H. (2011). Industrial structure and economic fluctuation—Evidence from China. The Social Science Journal, 48(3), 468-477.
Fan, S., & Rao, N. (2003). Public spending in developing countries: trends, determination, and impact. International food policy research institute (IFPRI). Environment and production technology division.
Favarra, G. (2003). An empirical reassessment of the relationship between finance and growth. International Monetary Fund.
Friedl, B., & Getzner, M. (2003). Determinants of CO2 emissions in a small open economy. Ecological Economics, 45(1), 133-148.
Fung, M. K. (2009). Financial development and economic growth: convergence or divergence?. Journal of International Money and Finance, 28(1), 56-67.
Goldsmith, R. W. (1969). Financial structure and development (Vol. 1, p. 969). New Haven: Yale university press.
HalicioÄlu, F. (2003). Testing Wagner's law for Turkey, 1960-2000. Review of Middle East Economics and Finance, 1(2), 129-140.
Halicioglu, F. (2009). An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37(3), 1156-1164.
Hao, C. (2006). Development of financial intermediation and economic growth: The Chinese experience. China Economic Review, 17(4), 347-362.
Herwartz, H., & Walle, Y. M. (2014). Determinants of the link between financial and economic development: Evidence from a functional coefficient model. Economic Modelling, 37, 417-427.
Hsueh, S. J., Hu, Y. H., & Tu, C. H. (2013). Economic growth and financial development in Asian countries: A bootstrap panel Granger causality analysis. Economic Modelling, 32, 294-301.
Ibrahim, M. H. (2007). The role of the financial sector in economic development: the Malaysian case. International Review of Economics, 54(4), 463-483.
Jalil, A., & Feridun, M. (2011). Impact of financial development on economic growth: empirical evidence from Pakistan. Journal of the Asia Pacific Economy, 16(1), 71-80.
Jedidia, K. B., Boujelbène, T., & Helali, K. (2014). Financial development and economic growth: New evidence from Tunisia. Journal of Policy Modeling.
Khan, A. (2014). How Does Stock Prices Respond to Various Macroeconomic Factors? A Case Study of Pakistan. Journal of Management Info, 4(1), 75-95.
Khan, M. S., & Senhadji, A. S. (2003). Financial development and economic growth: A review and new evidence. Journal of African Economies, 12(suppl 2), ii89-ii110.
Kweka, J. P., & Morrissey, O. (2000). Government spending and economic growth in Tanzania, 1965-1996. Centre for Research in Economic Development and International Trade, University of Nottingham.
Lartey, E. K. (2010). A note on the effect of financial development on economic growth. Applied Economics Letters, 17(7), 685-687.
Levine, R. (2005). Finance and growth: theory and evidence. Handbook of economic growth, 1, 865-934.
Levine, R., Loayza, N., & Beck, T. (2000). Financial intermediation and growth: Causality and causes. Journal of monetary Economics, 46(1), 31-77.
Li, Y. E. (2008). An empirical analysis of macro economic fluctuation and industry construction change. Journal of Shangdong University, 3, 21-24.
Luintel, K. B., Khan, M., Arestis, P., & Theodoridis, K. (2008). Financial structure and economic growth. Journal of Development Economics, 86(1), 181-200.
Ma, Y., & Jalil, A. (2008). Financial development, economic growth and adaptive efficiency: a comparison between China and Pakistan. China & World Economy, 16(6), 97-111.
Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach. Economic Modelling, 37, 386-394.
Misati, R. N., & Nyamongo, E. M. (2012). Financial liberalization, financial fragility and economic growth in Sub-Saharan Africa. Journal of Financial Stability, 8(3), 150-160.
Murinde, V. (2012). Financial development and economic growth: Global and African evidence. Journal of African Economies, 21(suppl 1), i10-i56.
Naceur, S. B., & Ghazouani, S. (2007). Stock markets, banks, and economic growth: Empirical evidence from the MENA region. Research in International Business and Finance, 21(2), 297-315.
Narayan, P. K., Nielsen, I., & Smyth, R. (2008). Panel data, cointegration, causality and Wagner's law: Empirical evidence from Chinese provinces. China Economic Review, 19(2), 297-307.
Nelson, R. R., & Pack, H. (1999). The Asian miracle and modern growth theory. The Economic Journal, 109(457), 416-436.
New York, NY: MacMillan (extracts from Finanzwissenschaft, Part I, Third Edition, Leipzig, 1883, pp. 4–16, 69–76).
Nieuwerburgh, S. V., Buelens, F., & Cuyvers, L. (2006). Stock market development and economic growth in Belgium. Explorations in Economic History, 43(1), 13-38.
Peacock, A., & Scott, A. (2000). The curious attraction of Wagner's law. Public Choice, 102(1-2), 1-17.
Pesaran, M. H., & Pesaran, B. (1997). Working with Microfit 4.0: interactive econometric analysis. Oxford University Press.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16(3), 289-326.
Qureshi, M. I., Rustum, A., Rustum, S., Omar, A. B., and Zaman, K. (2013). Factors Influencing Customer Satisfaction in Banking Sector of Pakistan. Report and Opinion, 5(2).
Rajan, R. G., & Zingales, L. (1998). Financial dependence and growth. American Economic Review, 88, 559–586.
Rehman, J., Iqbal, A., & Siddiqi, M. W. (2010). Cointegration-causality analysis between public expenditures and economic growth in Pakistan. European Journal of Social Sciences, 13(4), 556-565.
Roca, J., Padilla, E., Farré, M., & Galletto, V. (2001). Economic growth and atmospheric pollution in Spain: discussing the environmental Kuznets curve hypothesis. Ecological Economics, 39(1), 85-99.
Rousseau, P. L., & Wachtel, P. (2011). What is happening to the impact of financial deepening on economic growth?. Economic Inquiry, 49(1), 276-288.
Samargandi, N., Fidrmuc, J., & Ghosh, S. (2013). Financial development and economic growth in an oil-rich economy: The case of Saudi Arabia. Economics.
Silva, E. G., & Teixeira, A. A. (2008). Surveying structural change: Seminal contributions and a bibliometric account. Structural Change and Economic Dynamics, 19(4), 273-300.
Tang, T. C. (2009). Wagner's Law Versus Keynesian Hypothesis in Malaysia: An Impressionistic View. Universiteit Antwerpen. Centre for ASEAN studies (CAS).
Uddin, G. S., Sjö, B., & Shahbaz, M. (2013). The causal nexus between financial development and economic growth in Kenya. Economic Modelling, 35, 701-707.
Wagner, A. (1958). Three extracts on public finance. In R. A. Musgrave, & A. T. Peacock (Eds.), Classics in the theory of public finance (pp. 1–15).
Wynne, J. (2002). Information Capital, Firm Dynamics and Macroeconomic Performance. mimeo.