The Interaction between Globalization and Financial Development: New Evidence from Panel Co-integration and Causality Analysis

Magda Kandil, Muhammad Shahbaz and Samia Nasreen

MPRA Paper from University Library of Munich, Germany

Abstract: The paper studies the impact of globalization on financial development in a sample of 32 developed and developing economies over the period 1989-2012. Indicators of financial development include three banking indicators (private sector credit, domestic credit, and liquid liabilities) and three indicators of stock market development (value traded, turnover ratio and stock market capitalization), all relevant to GDP. Two panel estimation methodologies are under consideration: panel co-integration and panel VAR. The findings reveal that financial development affects economic growth and globalization positively. Globalization helps mobilize economic growth, but does not help financial development as it helps increase access to external financing. Quality institutions do not impact financial development although the latter increases incentives for better quality institutions in support of sustainable growth.

Keywords: Financial development; globalization; cointegration (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2013-12-09, Revised 2013-12-10
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The interaction between globalization and financial development: new evidence from panel cointegration and causality analysis (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52148

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