Bank Credit, Export And Economic Growth In The ASEAN Countries : A Cointegration and Error Correction

• Main Author: Khor, Kok Keat
• Format: Thesis
• Language: English; English
• Published: 2001
• Subjects: HB Economic Theory
• Online Access: http://etd.uum.edu.my/323/1/Khor_Kok_Keat%2C_2001.pdf; http://etd.uum.edu.my/323/2/1.Khor_Kok_Keat%2C_2001.pdf; http://etd.uum.edu.my/323/

The main thrust of this study is to deploy an econometric analysis to determine empirically the long run equilibrium relationship and its causal effects among bank credit (a proxy to financial development), real export and economic growth for ASEAN - 5 member economies. The empirical findings suggest the existence of a long run equilibrium relationship over a 31-year time period among the variables within the multivariate model. Subsequent analysis also found that there is a unidirectional Granger-causality from financial development to real economic growth but neither the reverse nor bidirectional among Malaysia, Singapore and Thailand while there is no evidence of causality whatsoever in Indonesia and Philippines. Such finding implies a pattern of 'supply-leading' phenomenon between Financial - economic developments here; whereby financial development precedes and induces economic gowth in developing economies. We also record causality running from financial development to real export growth in Thailand alone, indicating that export Financing through directed credit programme encourages promotion of exports. Therefore, a stress on policy fundamentals giving particular attention pertaining to public financial sector policies, policy of financial reforms and restructuring as well as sustaining a level of confidence towards 'market-oriented' financial policy are crucially important strengthening financial development and thereby economic growth.