Financial development, social development, and economic growth: the causal nexus in Asia

Abstract

The paper investigates the causal nexus among financial development, social development, and economic growth for 15 Asian countries for the period 1961–2011. Using the Granger causality test, both at the individual country and at the panel settings, the results suggest that (1) financial development and social development generally lead to economic growth; (2) the Granger causality from financial development to economic growth and from economic growth to financial development coexists; (3) the Granger causality from social development to economic growth and from economic growth to social development coexists; and (4) the Granger causality from financial development to social development and from social development to financial development coexists. The findings are, however, not uniform; it varies from country to country and from region to region.