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role of financial market in the process of economic development :the case of six Asian economies

English Abstract

The study analyzes the effects of financial development on the growth of real GDP in six Asian economies: China, Hong Kong, India, South Korea, Singapore and Taiwan covering the most recent periods from 1994 to 2011. Based on two orthodox complementary models, I estimate regression equations for panel data and all six economies. The main findings are as follows: (a) turnover value of stock market and credit to private sector promote growth for six economies as a whole, whereas the liquid liabilities of financial system and total domestic credits have no impact. (b) Granger causality tests support the view that more credits to the private sector is a consequence of economic growth, while bidirectional causality is spotted between the turnover value of stock market and the economic growth. (c) For individual economies, the development of stock market has a beneficial effect on growth in China, Hong Kong, Korea and Singapore, but does not play a critical role in India and Taiwan. Instead, India’s GDP growth gains from the growth rate of credits allocated to the private sectors. Taiwan is the only economy whose GDP growth is unrelated to financial development.

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Cheung, Sio In


Faculty of Business Administration




Finance -- Asia

Capital market -- Asia

Economic development -- Asia -- History -- 21st century

Asia -- Economic conditions -- 21st century

Banking and Finance -- Department of Finance and Business Economics

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