De-jure Financial Liberalization and Economic Growth: An Empirical Analysis

Authors

  • madiha munir National University of Science & Technology (NUST), Islamabad
  • Ather Maqsood Ahmed National University of Science & Technology (NUST), Islamabad,
  • Gulzar Khan National University of Science & Technology (NUST), Islamabad,

DOI:

https://doi.org/10.52567/pjsr.v3i4.168

Abstract

This paper investigated the finance-growth nexus by adopting a novel approach for Pakistan. Firstly, we have constructed a financial liberalization index by incorporating a number of time-varying financial frictions and reforms which is a manifestation of de-jure financial liberalization process.  Secondly, for examining the impact of financial liberalization on growth, we extended Solow-Swan growth model to construct a financial sector augmented growth model. By incorporating de-jure financial liberalization index, we examined the growth-finance linkages.  By employing the Auto-Regressive Distributive Lag model and error-correction mechanism, results of the study showed that de-jure financial liberalization provides momentum to economic growth in the short-run as well as in the long run. Empirical findings highlighted that moving towards more liberalized financial system by reducing rigidities and expediting effective reform process offers very hopeful prospects of economic growth in developing countries like Pakistan. 

Author Biographies

  • madiha munir, National University of Science & Technology (NUST), Islamabad

    PhD Scholar

  • Ather Maqsood Ahmed, National University of Science & Technology (NUST), Islamabad,

    Professor

  • Gulzar Khan, National University of Science & Technology (NUST), Islamabad,

    Visiting Faculty

Additional Files

Published

2021-12-31

Issue

Vol. 3 No. 4 (2021): Pakistan Journal of Social Research (PJSR)

Section

Research Article

License

Copyright (c) 2022 madiha munir, Ather Maqsood Ahmed, Gulzar Khan

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

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How to Cite

[1]
“De-jure Financial Liberalization and Economic Growth: An Empirical Analysis”, Pak. J, Soc. Sci., vol. 3, no. 4, pp. 368–378, Dec. 2021, doi: 10.52567/pjsr.v3i4.168.