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Effect of Financial Development and Foreign Direct Investments on Economic Growth in SAARC Countries: A Panel ARDL Approach

Authors:

. Vandana ,

Guru Jambheshwar University of Science and Technology, Hisar 125001, IN
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Haryana School of Business
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Shveta Singh

Guru Jambheshwar University of Science and Technology, Hisar 125001, IN
About Shveta
Haryana School of Business
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Abstract

This paper explores the impact of financial development and foreign inflows on economic growth in the following SAARC nations: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka from 2006 to 2019. The econometric tool used is the Autoregressive Distributed Lag Model (ARDL) in panel settings and Pedroni Cointegration test to observe the connection between financial development, foreign influx, and economic growth. Findings from the Pedroni panel cointegration test showed that the variables are cointegrated in the long run. Pooled Mean Group (PMG) estimates suggested that broad money positively affects economic growth while gross savings have an undesirable influence on economic growth. However, the influence of domestic credit was negative but insignificant. Further, the influence of external influx on output growth is found to be adverse. The findings suggested that the economic policies of these countries should be defined by considering the financial sector of these countries.
How to Cite: Vandana, ., & Singh, S. (2022). Effect of Financial Development and Foreign Direct Investments on Economic Growth in SAARC Countries: A Panel ARDL Approach. Asian Journal of Management Studies, 2(1), 72–97. DOI: http://doi.org/10.4038/ajms.v2i1.44
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Published on 21 Mar 2022.
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