The Causality Variables of Financial Sector Deepening to Economic Growth in Indonesia 1986 - 2015

Abstract

This study aims to examine the causality and role as the variables of the financial sector deepening with economic growth in Indonesia. The test of causality in this research acres using heading Granger Causality Test and VECM test. The tests are conducted using annual data from 1986 to 2015. The result of research using heading Granger Causality shows that there is no causality between M2 ratio with economic growth. While the ratio of private credit by deposit money banks and gross fixed capital formation ratio has a one-way causality with economic growth. The ratio of total outstanding international debt securities with economic growth has bidirectional causality. Based on the results of VECM in the long run, the ratio of private credit by deposit money bank has a negative effect on economic growth and the ratio of total outstanding international debt securities has negative effect and not significant on GDP.

The Nexus of Export, FDI, Financial Development and Economic Growth in North Sumatra, Indonesia

“…Finally, Salebu (2014) stated that the positive and significant effects of FDI on economic growth only exist in four sectors: crops and plantation, mining, the food industry, transportation, and communication. Financial progress calculated in the private credit ratio of deposit money banks has a uniform cause and economic growth in Indonesia (Astuti, 2018). Financial development at the regional level shows a positive and significant influence in Java (Baroroh, 2012) and (Supartoyo et al, 2018) found the same result for Sulawesi.…”

Exploring the Nexus between Regional Fiscal Capacity and the Convergence of Inclusive Economic Development

“…A research gap lies in the limited existing literature specifically analysing the influence of regional fiscal capacity on the convergence of inclusive economic development across the 34 provinces of Indonesia. While there have been studies on fiscal decentralisation and its impact on economic growth (Aprianti & Sulindrina, 2023;Baskaran & Feld, 2013;Canavire-Bacarreza et al, 2020;Jamil et al, 2022;Lamba et al, 2019), there is a necessity to further investigate the relationship between regional fiscal capacity and the convergence of inclusive economic development. This research analyses the influence of regional fiscal capacity on the convergence of inclusive economic development across 34 provinces in Indonesia.…”