Does Financial Permeation Induce Economic Growth? Evidence from SAARC Countries

Abstract

This study empirically inspects the question of whether financial permeation promotes economic growth. The fixed effects regression technique is employed to examine the effects of financial permeation on economic growth. The empirical analysis is conducted with annual data from 2004 to 2016 with four proxies for financial permeation. Empirical results show that all the proxies of financial permeation have significant positive impacts on economic growth, measured by GDP per capita, of SAARC countries. We also observed that global financial crisis has significant negative effects on economic growth. Empirical findings of this study imply that the governments of SAARC countries should undertake more financial permeation policies to make the economic growth sustainable. The present study contributes to empirical literature of the similar issue by reapproving (or else) the outcomes of past researches done across the domain.