Does financial development improve economic growth? The role of asymmetrical relationships

Singh, Shveta; Vandana, .; Yadav, Miklesh Prasad; Power, Gabriel J.

doi:10.1016/j.gfj.2023.100831

Cited by 15 publications

(13 citation statements)

References 59 publications

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“…This is consistent with the findings of Gök (139), who found that financial development leads to environmental degradation through increased carbon emissions (CO2). Additionally, Singh et al (186) investigated the impact of financial development on economic growth in India, a major emerging economy, using a Non-linear Autoregressive Distributed Lag (ARDL). The findings showed a consistently negative impact of financial development and foreign inflows on economic growth in the long and short runs.…”

Section: Discussionmentioning

confidence: 99%

Fintech, financial inclusion, and sustainable development in the African region

Tidjani,

Madouri

2024

Front. Appl. Math. Stat.

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In this study, we explore the nexus between sustainable development and finance, with a specific focus on the African region–a critical yet underexplored context in the existing literature. Against the backdrop of evolving challenges in financial inclusion, improved access, and the growing prevalence of financial technology (FinTech), we aim to fill a research gap by investigating the connection between FinTech, financial inclusion, and sustainable development. The empirical exploration spans 25 African countries from 2011 to 2019, employing econometric methods such as dynamic panel (SGMM two-steps) and static panel (OLS, FE, LSDV). Utilizing key indicators like Adjusted Net Savings (ANS) and Gross Saving rate (GS), our findings reveal a substantial positive impact of financial inclusion and FinTech on sustainable development. However, an intriguing discovery emerges as the interaction between these variables exhibits a weak negative and significant effect. As a unique contribution to the existing literature, we estimate marginal effects at various levels of FinTech and financial inclusion on sustainable development. Beyond insights, our study offers vital policy recommendations, emphasizing the necessity for improved collaboration among financial service providers to avoid redundancy. Furthermore, we highlight the critical need to expand financial infrastructure, advocate for FinTech promotion, and foster inter-African cooperation.

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Section: Discussionmentioning

confidence: 99%

Fintech, financial inclusion, and sustainable development in the African region

Tidjani,

Madouri

2024

Front. Appl. Math. Stat.

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“…There are studies in the present literature examining the impact of financial development on economic growth (Boikos et al, 2022;Hasanov et al, 2023;Singh et al, 2023). However, the study of the interaction effect of financial development with external finance variables is limited.…”

Section: Research Gapmentioning

confidence: 99%

“…However, there may be possibility of the interactive effects of financial development through external finance (trade, FDI and aid) on economic growth and the present paper incorporates that. Next, analyzing the nonlinear relation between financial development and economic growth is very recent in this area (Golder et al, 2023;Hasanov et al, 2023;Singh et al, 2023). The relationship between financial development and economic growth may not be linear throughout the time period.…”

Section: Research Gapmentioning

confidence: 99%

Financial development and growth nexus in Asian countries: mediating role of FDI, foreign aid and trade

Patra,

Sethi

2023

IJSE

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PurposeThis paper analyzes the direct effect of financial development and the mediating impact of financial development through foreign direct investment (FDI), foreign aid and trade on economic growth for all Asian countries.Design/methodology/approachA fixed-effect model with Driscoll–Kraay panel corrected estimators was employed to find the direct and mediating impact of financial developments on growth for all 47 Asian economies from 1980 to 2020. The bootstrapped panel-quantile regression (BPQR) model is used to check how this effect varies for different income groups of countries.FindingsThe results demonstrated that financial development positively impacts countries' economic growth. The interaction effect of financial development with FDI, foreign aid and foreign trade negatively impacts economic growth. The BPQR results showed that FDI and foreign aid help in the growth of lower quantile economies; however, the impact is negative for middle- and upper-income countries. Trade impacts growth positively for all the quantiles of economies.Research limitations/implicationsThe results suggest that the Asian economies must continue to provide thrust on the financial development of their own countries to achieve better growth. It also implied that the dependence on external finance is good for low-income countries and not advisable for middle- and upper-income countries.Originality/valueTo the best of the authors’ knowledge, the current study is the first to provide empirical evidence on analyzing both the direct and interaction effect of financial development on economic growth by considering all the Asian economies.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-09-2022-0587

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“…In addition to this, Financial Development has also emerged as a critical determinant of FDI in ows and economic growth (Olorogun et al, 2020). However, Kumari et al (2023) and (Singh et al, 2023) nd no bi-directional causality between Trade Openness and economic growth. Pham et al (2022) and(Asafo-Adjei et al, 2023) demonstrate that countries with well-developed nancial systems tend to attract more FDI.…”

Section: Introductionmentioning

confidence: 99%

Unleashing Economic Potential: Decoding the Fdi-economic Growth Nexus in G-15 Economies Amidst Unique Host Country Traits

BAJAJ

2023

Preprint

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The study aims to examine the impact of Foreign Direct Investment (FDI) on Economic Growth in G-15 countries while considering the influence of key host country characteristics, namely Macroeconomic Stability, Financial Development, Human Capital, and Trade Openness. The selection of these variables is supported by both theoretical foundations and empirical studies that highlight their significant role in shaping the FDI-growth interconnection. Panel data derived from World Bank Indicators, spanning the period from 1989 to 2021 are analysed using a Feasible Generalized Least Squares method (FGLS). The findings demonstrated that increased Financial Development, Human Capital, and Trade Openness enhanced the positive effects of FDI on economic growth. However, Inflation has a negative effect on growth. Policymakers in these nations should give precedence to developing strong financial markets, promoting trade liberalization, and investing in human capital to optimize the advantages of FDI. This research addresses a critical gap in the literature as limited empirical work has been conducted on the FDI-growth relationship specific to the G-15 economies. By employing rigorous panel data methodology and a long-term dataset, this study provides original insights into the interaction between FDI and host country characteristics, contributing to the existing body of knowledge.

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Does financial development improve economic growth? The role of asymmetrical relationships

Cited by 15 publications

References 59 publications

Fintech, financial inclusion, and sustainable development in the African region

Fintech, financial inclusion, and sustainable development in the African region

Financial development and growth nexus in Asian countries: mediating role of FDI, foreign aid and trade

Unleashing Economic Potential: Decoding the Fdi-economic Growth Nexus in G-15 Economies Amidst Unique Host Country Traits

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