The debate on the aid-growth nexus isn't a new one. This much heated issue has received a good deal of empirical coverage for the time series data of Bangladesh. In this study we have revitalized the old debate to minimize existing literature gaps on the aid-growth nexus in Bangladesh. We have employed ARDL bound testing approach to examine the nature of relationship between aid and economic growth in Bangladesh. In the long run per capita foreign aid positively influence per capita gross national income. It exerts the same effect in short run too. In long run a 1 percent increase in per capita aid leads to 0.27 percent increase in per capita gross national income and in short run 10 percent increase in aid per capita increases per capita gross national income by 0.54 percent. A positive effect from the policy variable has also been obtained which justifies the implementation of pro trade liberalization policy in the post liberation-war period.

This paper investigates how financial development is related to poverty reduction in a developing nation such as Bangladesh. Employing the ARDL bound testing approach to cointegration, the study finds that the variables representing poverty reduction and financial development are cointegrated. The long-run and the short-run estimations indicate that financial development reduces poverty. In particular, on average, a 1 percent increase in financial development reduces poverty by 0.6 percent in the long run, and in the short run, the rate is 0.4 percent. The results are robust even when controlling for military expenditure and macroeconomic stability variables. The study also discovers that even though military expenditure may seem innocuous in the short run, it hurts poverty reduction in the long run.

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