An empirical investigation of banking sector development and economic growth in a panel of selected SAARC countries

Javed Ahmed and Malik Fahim Bashir
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Javed Ahmed: COMSATS Institute of Information Technology, Abbottabad, Pakistan
Malik Fahim Bashir: COMSATS Institute of Information Technology, Abbottabad, Pakistan

Theoretical and Applied Economics, 2016, vol. XXIII, issue 2(607), Summer, 65-72

Abstract: This study examine the relationship between banking sector development and economic growth in South Asian Association for Regional Cooperation (SAARC) over the period of 1980-2013 by entailing ordinary least square (OLS), two stages least square (TSLS), and panel TSLS fixed-effect model. Key banking sector development variables include money and quasi money (RQM) and domestic credit to private sector by banks (PC) have a positive and statistically robust effect on economic growth in all models. The study concludes that no economy can develop without a substantial growth in the banking sector and it is important to have a sound and rigorous banking system for building a sustained economic growth. Therefore, the SAARC economies are suggested to focus on the development of the banking sector for their long run growth.

Keywords: Banking Sector Development; Economic Growth; SAARC. (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (4)

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