Finance-Growth-Crisis Nexus in Asian Emerging Economies: Evidence from VECM and ARDL Assessment

Takashi Fukuda () and Jauhari Dahalan ()
Additional contact information
Takashi Fukuda: 3-35-13 Kengun, Kimamoto-shi, Kumamoto-ken 862-0911, Japan
Jauhari Dahalan: College of Business, UniversitiUtara Malaysia, 06010 UUM Sintok, Kedah, Malaysia

International Journal of Business and Economic Sciences Applied Research (IJBESAR), 2012, vol. 5, issue 2, 69-100

Abstract: This paper examines the causal relationship between financial development, economic growth and financial crisis in the five Asian emerging economies (India, Indonesia, South Korea, Malaysia and Thailand) during the period 1982 to 2007. All of these countries are known as emerging economies with well known financial crisis episodes (i.e., India's 1991 crisis and the Asian 1997 crisis). The summary indicators of financial development, financial crisis and financial repression are constructed through the principal component approach. The cointegration and Granger causality analysis are conducted by using two techniques of vector error correction model (VECM) and autoregressive distributed lag (ARDL). The main findings are: (1) the direction of the finance-growth nexus is country-specific; (2) deeper financial development can lead to financial crisis; and (3) financial crisis has a negative impact on economic growth (except Korea for the last two). On policy implication, we ascertain that the growth effect of financial deepening should be appraised with the view that financial deepening could gravitate toward financial crisis.

Keywords: Finance-growth nexus; financial crisis; Asia; VECM; ARDL (search for similar items in EconPapers)
JEL-codes: E44 O16 O53 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://ijbesar.af.duth.gr/docs/volume5_issue2/finance_growth_crisis.pdf (application/pdf)
https://ijbesar.af.duth.gr/volume5_issue2.php (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tei:journl:v:5:y:2012:i:2:p:69-100

Access Statistics for this article

International Journal of Business and Economic Sciences Applied Research (IJBESAR) is currently edited by Christos Grose and Persefoni Polychronidou

More articles in International Journal of Business and Economic Sciences Applied Research (IJBESAR) from Democritus University of Thrace (DUTH), Kavala Campus, Greece Contact information at EDIRC.
Bibliographic data for series maintained by Kostas Stergidis ().