Does Financial Development Cause Economic Growth? A Panel Data Dynamic Analysis for the Asian Developing Countries

Abstract This paper examines the causal relationship between financial development and economic growth of the Asian developing countries from a panel data perspective and uses the system GMM technique developed by Arellano & Bover (1995) Arellano, M. and Bover, O. 1995. Another look at the instrumental variable estimation of error-component models. Journal of Econometrics, 68: 5–27. [CROSSREF][CSA] [Google Scholar] and Blundell & Bond (1998) Blundell, R. W. and Bond, S. R. 1998. Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87: 29–52. [CROSSREF][CSA] [Google Scholar] and conducts causality testing analysis. The panel data sets involve 13 Asian developing countries: Bangladesh, India, Indonesia, South Korea, Lao PDR, Malaysia, Myanmar, Nepal, Pakistan, Philippine, Singapore, Sri Lanka and…