Abstract
The purpose of this study is to find whether there is any significant impact, be it short run or long run, of financial development (FD) on economic growth from nine island economies. Despite the vast researches on the FD and economic growth nexus, little has been known from the perspective of island economies. Therefore, this study has attempted to analyse the dynamic relationship by incorporating both time series and cross–sectional data from the island economies over the period of 30 years (1980 to 2009). This study employed error correction–based pooled mean group (PMG), mean group (MG) and dynamic fixed effect (DFE) model for analysing dynamic heterogeneous panel data. Results from the PMG estimates demonstrate that financial development has a negative short run impact on economic growth. Whilst in the long run, there is a positive and a homogenous effect of financial development on growth across the island economy.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Economic Policy in Emerging Economies
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
