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ID 41408
本文ファイル
著者
Rasika Perera
Ichihashi, Masaru 大学院国際協力研究科 広大研究者総覧
キーワード
Financial development
economic growth
vector error correction
Sri Lanka
NDC
経済
抄録(英)
A well-developed financial sector can affect a country’s economic development by channeling financial resources in the most productive way and by providing sufficient credit to the private sector for investments. Studying the relationship between financial development and economic growth has become increasingly important. Although there are a significant number of studies on this subject, ideas about the relationship between financial development and economic growth are controversial due to mixed results. The theoretical background to this relationship has a long history. In 1911, Schumpeter argued that financial development plays an essential role in economic development because intermediary financial institutions have the capacity to allocate savings to more productive investments that promote economic progress. Other empirical studies have shown unidirectional, bidirectional or no relations between these two factors.

Sri Lanka introduced reforms to its financial sector in 1977 by implementing an open economic policy. Therefore, studying the relationship between financial development and economic growth in this country is important. The objective of this study is to examine the relationship between financial development and economic growth in Sri Lanka for the period 1952 to 2014. After considering time series characteristics of the data, this study employs vector error correction methodology. This study uses five variables: real per capita GDP, ratio of broad money to GDP, ratio of investments to GDP, deposit interest rate in real terms and trade ratio.

The results of this study confirm that there is a unidirectional relationship from financial development to economic growth in Sri Lanka. In addition, the investment ratio and trade ratio negatively affect the real per capita GDP and broad money ratio, while the deposit interest rate positively affects both variables. There are two cointegrating relationships among the five variables, and the error correction coefficients show economically and statistically significant results. The error correction coefficient of the GDP relationship is -0.0430 while error correction for broad money supply is -0.3693.

This study highlights the importance of developing the financial sector in Sri Lanka to increase the growth of the country’s GDP. The interest rate has become the significant factor for GDP growth and for implementing monetary policy. The open economic policy has significant effect on money supply, and money supply affects the economic growth in the short term. Therefore, policy makers should consider about the time range in making policies.
掲載誌名
IDEC DP2 Series
6巻
6号
開始ページ
1
終了ページ
23
出版年月日
2016-09
出版者
広島大学大学院国際協力研究科
言語
英語
NII資源タイプ
紀要論文
広大資料タイプ
学内刊行物(紀要等)
DCMIタイプ
text
フォーマット
application/pdf
著者版フラグ
publisher
部局名
国際協力研究科
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