Qazi Muhammad Adnan Hye

Does financial development hamper economic growth: empirical evidence from Bangladesh

The objective of this study is twofold. (a) Construct the first ever financial development index (FDI) for Bangladesh using the principal component method (PCM). (b) Use the FDI to explore the existence of a long run relationship between FDI and economic growth. The Augmented Dickey Fuller and the Ng-Perron unit root tests have been applied to examine the stationarity properties of the series. To explore a long run relation, the Autoregressive Distributed Lag (ARDL) approach to cointegration; and to assess the stability of the parameters, the rolling window regression approach have been used. The results show that the impact of real interest rate (RIR) and FDI on economic growth is negative. Estimates from rolling window method show that FDI and RIR are negatively related to economic growth for the years 1987--1988, 1992--1999, 2002--2006, 2008 and 2009; and 1986--1998, 2006 and 2007, respectively. The results may help policymakers formulate effective financial sector policies as a tool to promote economic growth in Bangladesh.

Financial development index and economic growth: empirical evidence from India

Purpose - The purpose of this paper is to construct a financial development index (FDI) for the Indian economy and also examine the relationship between FDI and economic growth. Design/methodology/approach - Augment Dickey Fuller, Phillips Perron and Ng Perron unit root tests are employed in order to determine the level of integration. The long- and short-run dynamics are obtained by using auto-regressive distributed lag approach to cointegration and rolling window approach to estimate coefficient of each observation. Findings - The results indicate that long-run relationship is presented among the economic growth, FDI, real-interest rate (RIR), labor force and capital. But FDI negatively associated with economic growth in the case of long- and short-run and RIR also negatively determine the economic growth only in the long run. The rolling regression result confirms that FDI negatively associated to growth in the years of 1978, 1979, 1984-1987, 1990, 1996-2000, 2004 and 2005 and RIR is impede economic growth in the years of 1978, 1979, 1986, 1988-1997, 2001, 2002, 2006 and 2008. Originality/value - The paper constructs an FDI for the Indian economy by using the four indicators of financial development. The findings are useful for Indias policy makers in order to maintain the parallel expansion of financial development and economic growth.

Exports, imports and economic growth in China: an ARDL analysis

Purpose - The purpose of this paper is to investigate the export-led growth, growth-led export, import-led growth, growth-led import and foreign deficit sustainability hypothesis in the case of China, using annual time series data from 1978-2009. Design/methodology/approach - For estimation evidence this study employs the Phillips Perron unit root tests to examine the level of integration and the autoregressive distributed lag (ARDL) approach is employed to determine the long run relationship, and the direction of long run and short run causal relationship is examined by using modified Granger causality test. Findings - The results confirm the bidirectional long run relationship between the economic growth and exports, economic growth and imports, and exports and imports. These findings guided the authors to conclude that the exports-led growth, growth-led exports, imports-led growth and growth-led imports hypothesis is valid, and foreign deficit is sustainable for China. The long run elasticities are as follows: the elasticity of economic growth with respect to exports is 0.591, and elasticity of exports with respect to economic growth is 1.635. The elasticity of economic growth with respect to imports is 0.621, and elasticity of imports with respect to economic growth is 1.392. Further more the elasticity of exports with respect to imports is 1.322, and imports elasticity with respect to exports is 0.975. Originality/value - This study utilizes the relative new cointegration method of ARDL approach. The empirical findings of this study are vital for policy makers of China in the formulation of trade policies.

Import‐economic growth nexus: ARDL approach to cointegration

This paper implements Auto-Regressive Distributed Lags (ARDL) to cointegration to explore long-run relation; and Granger procedure within Vector Error Correction Model (VECM) to test direction of causality between imports and economic growth for a sample of forty–ten each from high; upper-middle; lower-middle; and low-income–nations. We find long-run bidirectional causality in high-income nations except Japan. For others, we find mixed results .

Trade openness and economic growth: empirical evidence from India

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

Growth and Energy Nexus: An Empirical Analysis of Bangladesh Economy

This study aims to determine the relationship between the energy consumption and economic growth in the case of Bangladesh economy. Empirical evidence has presented by using the recent co integration techniques. The ARDL based causality test confirms bidirectional causality in the long run. The estimated coefficients of rolling window method demonstrate that both economic growth and energy consumption positively cause each other.

Financial Liberalization And Demand For Money: A Case of Pakistan

Literature in economics has identified many channels through which the financial liberalization may affect demand for money. There are evidences of stability as well as instability of demand for money due to financial development for developing economies. The objective of the current study is to examine the effect of financial liberalization on demand for money in Pakistan, i.e. whether financial liberalization has affected the demand for money or not. The issue is important as stable demand for money function is a prerequisite for formulating and operating monetary policy. To achieve the objective JJ cointegration and auto regressive distributed lag (ARDL) to the cointegration is employed to estimate the long-run equilibrium relationship between broad money M2 and composite financial liberalization index along with other determinants of demand for money like gross domestic product, real deposit rate and exchange rate. In order to assess the stability of the model, the parameter constancy tests, i.e. recursive residuals, CUSUM and CUSUMSQ tests have been applied. The empirical results indicated that for broad money, there exists long-run money demand function. The financial liberalization, gross domestic product and real deposit rate positively affect the demand for money in the long as well as short-run.

Import Demand Function for Bangladesh: A Rolling Window Analysis

This study aims to estimate aggregate import demand function for Bangladesh economy by using the data of 1980 to 2008. Estimation evidence provided by using autoregressive distributed lag (ADRL) approach to cointegration and rolling window regression method to estimate the coefficient of each observation in the sample by fixing the window size. The estimation result confirms long run relationship between imports, relative price and economic activity, and long run economic growth elasticity is (0.93) positive and relative price elasticity in the long run (-0.29) is negative. In contrast regression results of rolling window method demonstrates that the long run elasticities of national income variable are vary in the range of 0.81 to 0.96 and the relative price elasticities are negative according to the theory except few years.

Impact of financial liberalization on agricultural growth: a case study of Pakistan

Purpose - The purpose of this paper is to develop a financial liberalization index (FLI) and evaluate its impact on agricultural growth. Design/methodology/approach - The study uses the autoregressive distributed lag approach to determine the long run and short coefficients. Findings - The empirical results show that FLI affects agricultural growth positively in the short and the long run; but real interest rate positively affects agricultural growth in the short run and negatively in the long run. Originality/value - While previous research focuses on overall economic growth, this paper evaluates the impact of financial liberalization on the agricultural sector.

Financial Reforms and Industrial Sector Growth: Bound Testing Analysis for Pakistan

Financial Reforms and Industrial Sector Growth: Bound Testing Analysis for Pakistan This study investigates the relationship between the financial liberalization index and industrial sector growth for Pakistan. Annual time series data from 1971 to 2007 is used and ARDL bounds testing techniques are applied. In the short run both the financial liberalization index and the real interest rate speed up industrial sector growth. However, in the long run the financial liberalization index and real interest rate slow down industrial sector growth. The error correction terms indicate that 41% disequilibrium in the short run is adjusted every year in the long run.