Financial Development and GDP Volatility in China

Abu Wahid and Abdul Jalil

Economic Notes, 2010, vol. 39, issue 1‐2, 27-41

Abstract: This paper tests the relationship between financial development and GDP volatility using Chinese data for the period 1977–2006. Our findings in this study suggest that a higher financial development reduces the volatility of real per capita GDP. The Autoregressive Distributed Lag (ARDL) technique to cointegration is employed to establish the existence of a long run relationship between financial developments and standard deviation of GDP – a measure of GDP volatility. In addition, this research draws some policy implications for further development of the financial sectors for economic stability and sustainable growth in China.

Date: 2010
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https://doi.org/10.1111/j.1468-0300.2010.00225.x

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