Dynamics of Financial Development in Co-Integrated Error Correction Mechanism (Ecm): Evidence from Bangladesh

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Author Mohsin Ali, M. en_US
Author Kamrul Hassan, A. F. M. en_US
Available date 2009-11-25T12:41:33Z en_US
Available date 2015-01-19T08:46:02Z
Publication Date 2008 en_US
Citation Studies of Business and Economics, 2008, Vol. 14, No. 2, Pages 5-24. en_US
URI http://hdl.handle.net/10576/6851 en_US
Abstract This paper examines the factors that determine the level of financial development in Bangladesh. Three indicators of financial development are used as dependent variables: broad money, private credit and total bank liability-all percentage of Dross Domestic Product (GDP). Interest rate differential, trade openness, inflation, and exchange rate are included in the regression model as explanatory variables. Dependent and independent variables are found cointegrated and their short run adjustments are also found statistically significant. Among the variables, only interest rate differential is found insignificant. Inflation and exchange rate affect the level of financial development significantly irrespective of indicator selected. Trade openness significantly affects financial development when broad money and private credit indicators are used, but in case of bank liability it is found insignificant. The m- paper also examines the impact of financial sector reform program (FSRP) initiated in on financial development. The study finds that FSRP negatively affects financial development. The policy prescriptions that follow from the findings are to maintain inflation at a low level .and increase the integration of the economy wuh rest of the world en_US
Language en en_US
Publisher Qatar University en_US
Subject Error Correction Mechanism en_US
Title Dynamics of Financial Development in Co-Integrated Error Correction Mechanism (Ecm): Evidence from Bangladesh en_US
Type Article en_US
Pagination 5-24 en_US
Issue Number 2 en_US
Volume Number 14 en_US


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