Finance-led growth hypothesis for Asia: an insight from new data

Abdulkareem Alhassan, Muktar Sabi Adamu and Shuaibu Sidi Safiyanu

Journal of the Asia Pacific Economy, 2023, vol. 28, issue 2, 599-618

Abstract: The quest for the development of financial system has been the major concern of the Asian economies over the years. Using a System Generalized Methods of Moments technique for 44 Asian countries over the period 1980–2017, we evaluate the effect of financial development on economic growth for the entire Asia, sub-regions and groups of the countries by their levels of income. Additionally, we considered the subcomponents of the financial system. The contribution of this study hinges on the use of a comprehensive measure of financial development, and consideration of the heterogeneity of the Asian countries concerning the finance-growth nexus. The findings revealed that financial development spurs economic growth in Asia. Specifically, the development of financial institutions have a greater impact than development of financial markets on growth of upper-middle and high-income countries while the reverse is the case for low and low-middle income countries in the continent.

Date: 2023
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DOI: 10.1080/13547860.2021.1912883

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