Financial development and economic growth in BRICS revisited

An application of cross-sectional augmented ARDL

Bibliographic Data

ID4388712
AuthorsK Selvasundaram (Department of Corporate Secretary ship and Accounting Finance SRMIST India), Sagathevan, S Sagathevan (Department of Economics Madras Christian College India), Maryam Abdu (0000-0002-8926-0145, Department of Economics SRM IST India, corresponding author)
Year2022
Volume72
Issue245
Pages799-812
Publication date2022-09-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueInternational Social Science Journal (JOURNAL)
Journal identifiersISSN: 0020-8701 • E-ISSN: 1468-2451
PublisherWiley (PUBLISHER • GB)
DOI10.1111/issj.12364
OpenAlexW4287958788
LanguageEN
Citations received3
References cited21

This study reassesses the relationship between financial development and economic growth using the datasets of BRICS countries. The MG-ARDL and CD-ARDL (MG) models are considered to account for both heterogeneity and cross-sectional dependency. The overall results reveal a negative and insignificant effect of financial development on GDP from a MG-ARDL linear model and a negative and significant relationship between financial development and economic growth from the linear CD-ARDL (MG). However, when the square term of credit to the private sector is introduced, it is found that a positive and highly significant relationship exists between financial development and economic growth up to a point beyond which it turns negative and significant for both the MG-ARDL and CD-ARDL (MG) models. Based on the results, it is concluded that the excessive supply of private credit is harmful to the economy, thereby slowing its growth. Policy suggestions have also been discussed

Economics · Macroeconomics · Positive relationship · Energy, Environment, Economic Growth · Finance · Fiscal Policy and Economic Growth · Monetary Policy and Economic Impact

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