Impact of Financial Development on Export Performance: Evidence from South Asia

Kainat Riaz, Hafiz Muhammad Abubakar Siddique, Marc Audi and Sumaira Sumaira

MPRA Paper from University Library of Munich, Germany

Abstract: With the expansion of trade policies in the 1980s, countries began prioritizing foreign trade in their economic strategies, recognizing financial development as a key component. Financial development significantly influences macroeconomic performance and enhances economic growth by positively impacting exports. This study explores the relationship between financial development and export performance in South Asian countries, using panel data from 1990 to 2022. The analysis employs OLS fixed-effects models, FMOLS, DMOLS, and Pedroni co-integration tests. Results from the pooled OLS and fixed-effects models indicate that financial development, foreign direct investment, GDP, and population are key drivers of export performance. The Pedroni co-integration test confirms a long-term relationship among these variables. The findings suggest that promoting appropriate financial development and expanding financial market access are crucial for supporting businesses and boosting export performance in the region.

Keywords: Financial Development; FDI; Export Performance; South Asia (search for similar items in EconPapers)
JEL-codes: E0 G0 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-fdg and nep-int
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