Re-examining the Effect of Financial Development on Economic Growth in India: Does the Measurement of Financial Development Matter?

Q3 Business, Management and Accounting

Journal of Asia-Pacific Business Pub Date : 2020-04-02 DOI:10.1080/10599231.2020.1745050

S. Lenka, Ruchi Sharma

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引用次数: 13

Abstract

ABSTRACT Financial development is a multidimensional process. Over the years with the invention of various new products and services, the financial sector (both financial institutions and financial markets) across the globe has significantly evolved. The endeavor in this article is to investigate the relationship between financial development and economic growth in India for the period 1980–2017. To do so, it employs principal component analysis (PCA) to construct a financial development index, which measures the financial depth of the Indian economy. Using the autoregressive distributed lag (ARDL) and error correction model (ECM), the study estimates a positive effect of financial development on economic growth in the long run and the short run, respectively. In addition, the empirical estimates posit a bidirectional relationship between financial development and economic growth. The uniqueness of this study lies in that it unravels a unidirectional relationship between the stock market and economic growth. The study, however, finds that appropriate liberalization policies spur economic growth in India.

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重新审视印度金融发展对经济增长的影响:衡量金融发展是否重要?

摘要金融发展是一个多层面的过程。多年来，随着各种新产品和服务的发明，全球金融部门（包括金融机构和金融市场）发生了重大变化。本文试图调查1980-2017年印度金融发展与经济增长之间的关系。为此，它采用主成分分析（PCA）构建了一个金融发展指数，衡量印度经济的金融深度。利用自回归分布滞后（ARDL）和误差校正模型（ECM），该研究分别估计了金融发展对长期和短期经济增长的积极影响。此外，实证估计假定金融发展和经济增长之间存在双向关系。这项研究的独特之处在于，它揭示了股市与经济增长之间的单向关系。然而，该研究发现，适当的自由化政策刺激了印度的经济增长。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Asia-Pacific Business Business, Management and Accounting-Business and International Management

CiteScore

2.50

自引率

0.00%

发文量

期刊介绍： Present circumstances underscore the need to improve the understanding of conducting business with and within the Asia-Pacific countries. The Journal of Asia-Pacific Business™ provides a blend of cutting-edge knowledge and practical applications on business management and marketing strategy. In the Journal of Asia-Pacific Business™, you will find articles and feature sections that provide a pragmatic view of the business environment in this dynamic region. This essential resource offers readers a good blend of descriptive, conceptual, and theoretical articles dealing with current topics.