The nexus between financial integration and real economy: Solow-growth model concept

Md. Saifur Rahman and Farihana Shahari

Research in International Business and Finance, 2017, vol. 42, issue C, 1244-1253

Abstract: This paper aims to investigate the nexus between financial integration and the real economy in ASEAN+3 economies based on the concept of Solow-Growth Model. The equity indices as a proxy for financial markets are collected from each ASEAN+3 members and are segmented between two periods; before and after the financial cooperation agreement period. The finding presents several outcomes; 1) no cointegration nexus is found in the system during the pre-agreement periods; 2) the markets are found cointegrated during the post-agreement period, 3) financial integration is found to influence the real sectors of ASEAN+3 economies. Finally, this study offers policy implications to improve financial integration for stabilizing the real economy.

Keywords: Financial integration; ASEAN+3; Real economy; Generalized method of moments (GMM) (search for similar items in EconPapers)
JEL-codes: E24 E44 F3 G15 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:42:y:2017:i:c:p:1244-1253

DOI: 10.1016/j.ribaf.2017.07.062

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