Financial innovation and economic growth: Empirical evidence from China, India and Pakistan

Muhammad Rizwan Nazir, Yong Tan and Muhammad Imran Nazir

International Journal of Finance & Economics, 2021, vol. 26, issue 4, 6036-6059

Abstract: This study investigates the causal relationship between financial innovation and economic growth in China, India, and Pakistan over the period of 1970–2016. Using an Autoregressive Distributed Lag (ARDL) bound testing and Granger causality‐based Error Correction Model (ECM), this study finds that financial innovation generally has a positive and statistically significant impact on economic growth in the short‐run and long‐run. These results show that in the long‐run, monetary management and credit flow to the private sector play an essential role in economic growth. The trade openness and gross capital formation contribute considerably to the economic growth in China, India, and Pakistan. For robustness, this study also applies the Dynamic Ordinary Least Square (DOLS) and Fully Modified Ordinary Least Square (FMOLS) method. The findings of this study suggest that the financial sector plays an essential role in supporting innovation activity in Asian countries.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://doi.org/10.1002/ijfe.2107

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:wly:ijfiec:v:26:y:2021:i:4:p:6036-6059

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().