The dynamics of banking sector and stock market maturity and the performance of Asian economies
Rudra P. Pradhan,
Mak Arvin,
Neville R. Norman and
John H. Hall
Journal of Economic and Administrative Sciences, 2014, vol. 30, issue 1, 16-44
Abstract:
Purpose - – The purpose of this paper is to examine the nature of causal relations between banking sector maturity, stock market maturity, and four aspects of performance and operation of the economy: economic growth, inflation, openness in trade, and the degree of government involvement in the economy. Design/methodology/approach - – The authors look for possible links between the variables by conducting panel cointegration and causality tests, using a large sample of Asian countries over the period 1960-2011. Novel panel data estimation methods allow for robust estimates, using both variation between countries and variation over time. Findings - – The study identifies interesting causal links among the variables deriving uniquely from our innovations. In particular, The paper finds that for all regions considered, banking sector maturity and stock market maturity are causally linked, sometimes in both directions. Furthermore, stock market maturity may lead to economic growth, both directly and indirectly through indicators such as inflation and trade openness. The findings also support the notion that economic growth affects the maturity of the stock market in most regions. Practical implications - – The results lend support to the notion that a mature financial sector is a key contributor to generating economic growth. Furthermore, economic growth itself has the potential to bring about maturity in the financial sector. Originality/value - – The paper uses sophisticated principal-component analysis, panel cointegration, and Granger causality tests, methods not used in this literature before. The method was applied to recent data pertaining to 35 Asian countries – a group of countries that has previously not been adopted in this literature.
Keywords: Economic performance; Banking sector maturity; Panel cointegration test; Panel-Granger causality test; Stock market maturity (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)
Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eme:jeaspp:v:30:y:2014:i:1:p:16-44
DOI: 10.1108/JEAS-06-2013-0022
Access Statistics for this article
Journal of Economic and Administrative Sciences is currently edited by Associate Professor Ghulam A Arain and Dr Rebecca Abraham
More articles in Journal of Economic and Administrative Sciences from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().