Determinant of Financial Development Evidence from Selected Developing Countries

Abstract

This paper attempts to determine the effect of tax revenue, government spending, inflation rate, interest rate, exchange rate on the financial development (FD) in developing countries. Secondary data have been used in this research that was taken from Global Financial Index and WDI for the 36 years from 1980-2015. A Panel ARDL model is used to establish for long extent of time of time and short period of time communication among the product variable. So, to determine a statistics test are used such as descriptive statistics, unit rot test, granger causality test have been utilized in this research for driven conclusion. There is a positive and statistically significant connection between the tax revenue, government spending, and exchange rate on financial development. Other hand, there is a statistically significant and negative connection between the interest rate and inflation rate on financial development.