Financial innovation and economic growth: Empirical evidence from China, India and Pakistan

Nazir, Muhammad Rizwan; Tan, Yong; Nazir, Muhammad Imran

doi:10.1002/ijfe.2107

Cited by 44 publications

(28 citation statements)

References 53 publications

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“…Thus, they found that financial development caused economic growth in Mauritius, Namibia and South Africa. In their study, Nazir et al (2020) support a positive causality from financial development to economic growth. They show that financial innovations in forms of monetary management and credit flow to the private sector are important channels in the financial system for economic growth.…”

Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 76%

“…Firstly, evidence for a positive causality supports the idea that financial development either leads or follows economic growth towards the same or positive direction (Nazir et al, 2020;Shahbaz et al, 2018). Hence, the dominance of a market-based system presupposes the presence of a liberalised economy and a financial system that is open, liberal and market based.…”

Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 82%

“…There are two main debated positions as regards to the effects running from financial development to economic growth. These are positive effects (Nazir et al, 2020) and negative effects (La Porta et al, 2002).…”

Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 99%

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Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Kapaya

2020

AJEB

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Purpose The purpose of this study is to empirically weigh the evidence for financial depth, liquidity and efficiency role to economic growth, and test for the existence of cointegration between financial development variables and economic growth in Tanzania. Design/methodology/approach The study used the autoregressive distributed lag model with bound testing procedures. The sample covered yearly time-series data from 1980 to 2017, i.e. 38 years. Findings The results suggest that financial system depth is positively related to economic growth in the short run and that financial system liquidity and efficiency is strongly negatively associated with economic growth both in the short and long run. Further, it is found that financial development is cointegrated with economic growth. Thus, financial reforms and liberalisation have not fully brought the desired positive effects on economic growth yet. Originality/value The study uses principal component analysis to capture specific dimensions within the financial system as an intuitive way to aggregate financial development effects. Unlike studies that included several countries with heterogeneous characteristics, which are sometimes difficulty to homogenise, in recognition of countries’ unique experiences, this study uses data from Tanzania as a specific case. It documents pertinent pieces of evidence for a developing economy necessary for financial policy adjustments post the financial and economic liberalisation and reforms period. It nevertheless sheds light on financial policies for other comparable developing economies during and after both financial and economic liberalisation settings.

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Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 76%

Section: Literature Review 21 Finance-growth Nexusmentioning

confidence: 82%

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Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Kapaya

2020

AJEB

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“…However, in order to be consistent with the prevailing literature, this study considers three proxy measures that are widely used in various empirical studies. The first proxy is the broad-to-narrow money (M2/M1), which affects the demand for real cash balances, the income, and interest elasticity for money demand (Arrau and De Gregorio, 1993 ; Ansong et al, 2011 ; Bara and Mudxingiri, 2016 ; Bara et al, 2016 ; Qamruzzaman and Jianguo, 2017 , 2018a , c ; Nazir et al, 2018 ; Qamruzzaman and Wei, 2018 ). For the second measure of financial innovations (FI), this study employs the ratio of M3/M1, following Dunne and Kasekende ( 2018 ), Mannah-Blankson and Belnye ( 2004 ), Ajide ( 2015 ), and Kasekende and Nikolaidou ( 2014 ).…”

Section: Data and Methodology Of This Studymentioning

confidence: 99%

Economic Policy Uncertainty and Financial Innovation: Is There Any Affiliation?

et al. 2021

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The impetus of this study is to gauge the nexus between economic policy uncertainty (EPU) and financial innovation in Brazil, Russia, India, China, and South Africa (BRIC) nations for the period from 2004M1 to 2018M12. This study utilizes both the linear and non-linear autoregressive distributed lag (ARDL) models to evaluate the long-run and the short-run association between EPU and financial innovation; furthermore, the causal effects are investigated by following the non-Granger casualty framework. The results of long-run cointegration, i.e., the test statistics of modified F-test (FPSS), standard Wald test (WPSS), and tBDM, reject the null hypothesis and establish the presence of the long-run association between EPU and financial innovation. Conversely, long-run asymmetry cointegration revealed the test statistics of FPSS, WPSS, and tBDM in non-linear estimation. Furthermore, both in the long run and short run, the Wald test results disclose asymmetric effects running from EPU to financial innovation. In regards to the asymmetric impact of EPU on financial innovation, this study documents that the positive and negative shocks in EPU are negatively linked with financial innovation in the long run but are insignificant for short-run effects. Besides, financial innovation measured by R&D investment exhibits a positive linkage with shocks in EPU, implying that uncertainty induces innovation in the economy. Referring to causality effects, this study divulges the feedback hypothesis, i.e., bidirectional causality prevails between EPU and financial innovation in all sample countries.

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“…Financial innovation, like other types of innovation, is a constant act of integrating changes in the financial sector by improving and diversifying financial goods and procedures (Ang and Kumar 2014). The introduction of new financial resources and infrastructure into the financial system boosts financial services performance and capital market developments, ultimately enhancing growth in the economy (Nazir et al 2021).…”

Section: Introductionmentioning

confidence: 99%

Impact of Financial Innovation and Institutional Quality on Financial Development in Emerging Markets

Alawi

Abbassi

Saqib

et al. 2022

JRFM

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Financial innovation and institutional quality play a key role in financial development. This study investigates the impact of financial innovation and institutional quality on financial development in an emerging markets setting. We used the sample of 17 emerging markets based on the availability of data from the period 1990–2020. Data were extracted from the World Development Indicator database. In this study, panel unit root, fully modified ordinary least squares and Pedroni Integration tests were applied to analyze the data. We find that financial innovation and institutional quality are significantly and positively related to financial development. Better financial innovation increases financial development, whereas low institutional quality in an emerging market can deteriorate financial development.

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Financial innovation and economic growth: Empirical evidence from China, India and Pakistan

Cited by 44 publications

References 53 publications

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

Economic Policy Uncertainty and Financial Innovation: Is There Any Affiliation?

Impact of Financial Innovation and Institutional Quality on Financial Development in Emerging Markets

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