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Financial sector development

About: Financial sector development is a research topic. Over the lifetime, 1674 publications have been published within this topic receiving 90787 citations.


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01 Jan 2012
TL;DR: In this paper, the authors investigated the relationship between inflation and stock market development in Iran during the spring of 1999 up to in late summer of 2008, using a linear model to control other economic factors that may have correlations with the performance of financial market.
Abstract: The stock market is one of the important financial sectors of the economy that affect it by various forms. Form the view of many experts, the importance of financial sector development emanates from the point that, an efficient financial sector has a key role in mobilizing financial resources for investment, encouraging the entry of foreign investment and optimizing resource allocation mechanism. This study investigates the relationship between inflation and stock market development in Iran during the spring of 1999 up to in late summer of 2008. According to characteristics of the Iranian economy, the used model was based on Boyd, Levine and Smith (2001) models. We first used a linear model to control other economic factors that may have correlations with the performance of financial market. Then the threshold regression has been used to show the nonlinear relationship between inflation and financial market development. In this model, different thresholds have been considered for inflation. With attention to considered variables, the conditional least squares method (CLS) was used to estimate the model, which, by minimizing squares of errors, is a good criterion for selecting the optimal inflationary threshold. The results showed that, in the studied period, first, there is a positive relationship between inflation and indicators of stock market development and second, there is no threshold for effect of inflation on stock market.

5 citations

Posted Content
TL;DR: In this article, the authors investigate how finance and growth affect human development in Malaysia from Islamic economic development perspective by using standard time series technique, ARDL, and find that there is a long term relationship between finance, growth and human development.
Abstract: In a growing body of literature, importance of financial sector development and growth on human development has been emphasized but so far little empirical evidence to support this. Islam is a progrowth religion but the concept of development in Islam is multidimensional, understanding the relationship between finance, growth and human development would help us better explain and develop a sustainable pro-Islamic economic growth model, which would help eradicate mass poverty, income inequality and develop human capital in the Muslim world. This study aims to investigate how finance and growth affect human development in Malaysia from Islamic economic development perspective by using standard time series technique, ARDL. The study finds that there is a long term relationship between finance, growth and human development. Human development is found significantly correlated with the growth in the long run. It can be argued that financial development supports growth and growth ultimately promotes human development in the long run, also, macroeconomic stability is found significant for sustainable economic growth in Malaysia. However, oil price is found not correlated with growth in the long run for the Malaysian economy.

5 citations

Journal ArticleDOI
TL;DR: In this paper, the U-shaped financial Kuznets curve hypothesis is validated in terms of finance-inequality nexus, and it is shown that neither markets nor institutions play a significant role for the decrease in income inequality.
Abstract: Contrary to the empirical findings that there is a negative link between financial sector development and income inequality, we introduce a different result: in the earlier stages of the financial and economic development, the level of income inequality decreases, but with an ongoing developmental process, the later stages show that the above-mentioned link between finance and inequality turns into positive within the framework of financial Kuznets curve. In terms of finance-inequality nexus, we find that neither markets nor institutions play a significant role for the decrease in income inequality. When the results are measured within this context, the study concludes that the U-shaped financial Kuznets curve hypothesis is valid in the sample countries.

5 citations

Journal ArticleDOI
24 Jul 2020
TL;DR: In this paper, the authors investigated the link between bank profitability and economic growth in the Asia-Pacific region over the period 2004-2014 using the system GMM estimator, and found that a profitable banking sector is a prerequisite for economic growth.
Abstract: A number of studies have investigated the relationship between financial sector development and economic growth; however, the impact of bank profitability on economic growth is still unclear. We investigate the link between bank profitability and economic growth in the Asia-Pacific region over the period 2004–2014. Using the system GMM estimator, our findings suggest that a profitable banking sector is a prerequisite for economic growth in the Asia-Pacific region and that the impact of bank profitability on economic growth is more prominent in small banking sectors. Perhaps surprisingly, we found that the bank size has a negative impact on GDP growth, with the influence of bank profitability on economic growth reducing as the size of the banking sector increases. Our results also show that the impact of profitability on economic growth is much larger in developed economies compared to small emerging and large emerging economies.

5 citations

Journal ArticleDOI
TL;DR: In this paper, the authors examined empirically how real exchange rate misalignment affects economic growth in Pakistan and reported that financial sector development helps in minimising the adverse impact of RER misaligned, though not fully eliminating it.
Abstract: This study endeavours to examine empirically how real exchange rate (RER) misalignment affects economic growth in Pakistan. In this regard, we have not only estimated the direct impact but also the indirect impact of misalignment on economic growth by using the financial development channel. We have used time series data ranging from 1980 to 2016 to carry out the empirical analysis. After testing the time series properties of the selected variables, we computed long run equilibrium RER later used to calculate RER misalignment. Finally, we estimated the impact of misalignment on per capita economic growth, both direct and indirect. Our results reveal an adverse impact of RER misalignment on economic growth. However, we report that financial development helps in minimising the adverse impact of RER misalignment, though not fully eliminating it. Based on the empirical findings, the study suggests that exchange rate policies need to be managed more cautiously. Moreover, the financial sector development needs to be strengthened which may help in fully alleviating the adverse impact of RER misalignment on economic growth. JEL Classification: F31, GOO, O47 Keywords: Real Exchange Rate Misalignment, Financial Development, Economic Growth, FMOLS

5 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
202357
202279
202155
202093
201991
201888