The Relationship Between Financial Liberalization and Economic Growth in Emerging Asian Economies

Hamdard Islamicus, Vol. 43 No. S-1 373-393 (2020)

21 Pages Posted: 23 Mar 2021

See all articles by Shahrin Saaid Shaharuddin

Shahrin Saaid Shaharuddin

University of Malaya (UM) - Faculty of Business & Accountancy

Ali Fayyaz Munir

University of Malaya (UM)

Mohamed Albaity

University of Sharjah

Izlin Ismail

University of Malaya

Date Written: 2020

Abstract

The effect of financial liberalization on economic growth in eight emerging Asian countries are analyzed in this study using financial liberalization factors such as foreign equity liability (FEL), Edison & Warnock (EW) ratio as well as the Lane and Milesi-Ferretti (LMF) measure. Results of the study indicate that the financial liberalization factors on gross domestic product (GDP) do not Granger cause gross domestic product (GDP) in all countries except for South Korea. Also, it was found that the financial liberalization factors forecast an increase in GDP in most of the countries. The LMF factor is found to be affected by other financial liberalization factors. These findings also provide evidence that emerging countries can benefit from an increase in financial liberalization activities. Furthermore, policy makers and investors could use these evidences to guide them in devising economic policies and investment plans.

Keywords: Financial Market Liberalization, Economic Growth, Emerging Asian Economies, Causality.

Suggested Citation

Shaharuddin, Shahrin Saaid and Munir, Ali Fayyaz and Albaity, Mohamed and Ismail, Izlin, The Relationship Between Financial Liberalization and Economic Growth in Emerging Asian Economies (2020). Hamdard Islamicus, Vol. 43 No. S-1 373-393 (2020), Available at SSRN: https://ssrn.com/abstract=3785530

Shahrin Saaid Shaharuddin (Contact Author)

University of Malaya (UM) - Faculty of Business & Accountancy

Jalan Lembah Pantai
Kuala Lumpur, Wilayah Persekutuan 50603
Malaysia

Ali Fayyaz Munir

University of Malaya (UM) ( email )

Malaysia

Mohamed Albaity

University of Sharjah ( email )

University City Road
P. O. Box 27272
Sharjah, 27272
United Arab Emirates
+971568053216 (Phone)
+971568053216 (Fax)

Izlin Ismail

University of Malaya ( email )

Jalan Lembah Pantai
Kuala Lumpur, Wilayah Persekutuan 50603
Malaysia

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