FINANCIAL INTEGRATION AND ECONOMIC GROWTH OF SOUTH ASIA

Abstract

Throughout the past few decades, South Asia has experienced significant growth. Even amid the global financial crisis, South Asian growth remained steadfast. One of the world's fastestgrowing areas, South Asia is expected to see average GDP growth of 7% in 2015. Furthermore, many South Asian economies are thought to have followed a high development path as a result of their outward-looking policies. The expansion of South Asian economies between 1980 and 2015 is examined in this study along with the relationship between global financial integration and capital flow. Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka are the next eight nations. The study made use of the random effect model and the system generalized method of moments (GMM). The findings of the empirical research show that there is conflicting data regarding how capital and growth are impacted by global financial integration. Except for Afghanistan, Bangladesh, and the Maldives, the South Asian economies were noted in the research to be less open to the outside world than developing nations like Bhutan and India. Yet, there was a developing tendency in the external financial integration of South Asian economies. Despite the fact that many people in the region are concerned by increased levels of poverty, many countries in the South Asia region are global participants in many respects due to the nature of emerging markets and their status as democratic nations. Regulation in the South Asian region for many years has slowed economic growth and decreased the level of efficiency in nearly all economic activity. However, since the early 1980s, market deregulation has been implemented in many areas, which has helped the majority of the countries in the region in a variety of ways. One of the most important advantages is the integration of markets in the financial and other economic sectors, which leads to improved economic successes. The integration of the financial and economic markets, as well as its costs and benefits, are examined in this paper. We feel that the region will greatly benefit from the integration of the financial and economic markets