Financial Development and Economic Growth in Asia

This study investigates the relationship between financial development and economic growth using panel data on Asian economies with and without well-developed stock markets, considering several indicators of the banking sector and stock market development. The empirical results indicate that stock market capitalization has several causal effects on economic growth. Furthermore, Asian economies with developed stock markets tended to grow faster than those without well-developed stock markets, and economies with large stock market capitalization were inclined to experience strong economic growth. However, there was no significant evidence to support the idea that banking sector development indicators can boost economic growth in Asia.