Financial Development and Output Growth: A Panel Study for Asian Countries

Sangjoon Jun ()
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Sangjoon Jun: Kangnam University

East Asian Economic Review, 2012, vol. 16, issue 1, 97-115

Abstract: This paper investigates the relationship between financial markets and output growth for a panel of 27 Asian countries over 1960-2009. It utilizes the recently-developed panel cointegration techniques to test and estimate the long-run equilibrium relationship between real GDP and financial development proxies. Real GDP and financial development variables are found to have unit roots and to be cointegrated, based on various panel unit root tests and panel cointegration tests. We find that there is a statistically significant positive bi-directional cointegrating relationship between financial development and output growth by three distinct methods of panel cointegration estimation. Empirical findings suggest that financial market development promotes output growth and in turn output growth stimulates further financial development.

Keywords: Output Growth; Financial Development; Panel Unit Root and Cointegration; Bi-directional Relationship (search for similar items in EconPapers)
JEL-codes: E50 O20 O40 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:0080

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