International Journal of Management (IJM)

Volume 12, Issue 6, June 2021, pp. 310-321, Article ID: IJM_12_06_027
Available online at https://iaeme.com/Home/issue/IJM?Volume=12&Issue=6
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
DOI: 10.34218/IJM.12.6.2021.027

© IAEME Publication Scopus Indexed

ANALYZING THE IMPACT OF FINANCIAL

MARKET ON ECONOMIC GROWTH:
EVIDENCE FROM PAKISTAN
Dr. Sabahat Akram
Associate Professor at Department of Economics,
University of Kotli Azad Jammu & Kashmir, Pakistan.

Rabia Ayyub
MS Scholar at Department of Economics,
University of Kotli Azad Jammu & Kashmir, Pakistan.

Waqas Younis
Lecturer at Department of Economics,
University of Kotli Azad Jammu & Kashmir, Pakistan.

Muhammad Waseem Shahzad

Lecturer at Department of Economics,
University of Kotli Azad Jammu & Kashmir, Pakistan.

Dr. Faheem Ghazanfar

Associate Professor at Department of Public Administration,
University of Kotli Azad Jammu & Kashmir, Pakistan.

Dr. Muhammad Saim Hashmi

Assistant Professor at Department of Economics, Mirpur University of Science &
Technology, Mirpur Azad Jammu & Kashmir, Pakistan.

ABSTRACT
The current study was designed with the purpose to measure the impact of financial
market on Pakistan’s economic growth taking into consideration the time series data
ranging from 1980 to 2018. Variable used in this study are financial development,
banking sector development, foreign direct investment, and the secondary school
enrollment. This study describes three independent and one dependent variable,
secondary school enrolment has been used as control variable. The statistical tools
implied for the measurement of variables and deduct results were correlation analysis,
Unit root, ADF, co-integration test, ordinary least square regression. Vector Error
correction model has been used to check the long run relationships among the studied
variables. This study concludes that financial development and banking sector credit

https://iaeme.com/Home/journal/IJM 310 editor@iaeme.com

 Analyzing the Impact of Financial Market on Economic Growth: Evidence from Pakistan

has significant and positive impact on economic growth. The foreign direct investment
insignificant impact (in short run) on economic growth of Pakistan. The study also
present implications for policy makers as well as future researchers.
Key words: Financial Markets, Economic Growth, Banking Sector Development, X
Foreign Direct Investment, Bank Credit
Cite this Article: Sabahat Akram, Rabia Ayyub, Waqas Younis, Muhammad Waseem
Shahzad, Faheem Ghazanfar, and Muhammad Saim Hashmi, Analyzing the Impact of
Financial Market on Economic Growth: Evidence from Pakistan, International Journal
of Management (IJM), 12(6), 2021, pp. 310-321.
https://iaeme.com/Home/issue/IJM?Volume=12&Issue=6

1. INTRODUCTION
The relationship between financial markets and economic growth and development has been a
matter of debate in last decade especially with reference to the less developed and developing
countries. The banking sector play an important role in development of market and creation for
most profitable investment opportunities. Financial markets are not, however, always
sufficiently liquid and, because of substantially fixed securities, some, particularly small and
medium companies, cannot compete. A specialized market is a form of financial capital channel
from excess entities into deficit entities solely to carry out economic activities (Jalloh, 2009;
Purewal & Haini, 2021b). Financial markets in this regard include all financial institutions,
banks and other financial firms providing financial resources to organizations needing financing
for financial activities. Financial system of any economy is important as it provides basis for
the continuous rearrangement of financial resources to promote economic growth. Banking
sector holds pivotal position in financial markets. In fact, in case of developing countries
financial markets mainly consist of only banking sector and non-banking sector has only a small
share of financial markets. Therefore, banking sector play an important role for development
of market and creation of most profitable investment opportunities in these countries (Haini,
2021; Purewal & Haini, 2021a).
Financial markets and resources are necessary for the rapid growth of every economy
through efficient financial intermediation (Kihombo et al., 2021; Sulaiman et al., 2015b). These
financial markets like banks play a significant role in economic growth by embarking several
activities (Aziakpono, 2005; Ünvan & Yakubu, 2020). They serve as a medium for transferring
financial resources from surplus to deficit economic units. They ensure sufficient liquidity by
helping in maturity transformation. Furthermore, they provide mechanisms for diversification
and risk taking by ensuring risk management.
According to Agbada and Osuji (2013), efficient financial markets give rise to lively
financial system by improving employment and level of income. Greenwood and Jovanovic
(1990) argued that individuals can contribute to economic wellbeing through financial markets.
Furthermore, Pagano (1993) and Fry (1980) investigated those financial markets give rise to
economic growth. Increase in savings results in more investments which ultimately give rise to
capital formation rate with a positive influence on economic growth. Sometimes finance can
hinder economic growth activity. King and Levine (1994) investigated that sometimes
governments impose certain constraints on the banking system which slows down the
development of financial system and eventually leads toward poor economic growth. For
instance, interest rates ceilings and high mandatory reserves may exert negative influence on
the competitiveness of the financial sector.
In the last decades, numerous research studies were conducted to determine the effect of
financial markets on economic growth. However, the relationship between these variables is

https://iaeme.com/Home/journal/IJM 311 editor@iaeme.com

 Sabahat Akram, Rabia Ayyub, Waqas Younis, Muhammad Waseem Shahzad, Faheem Ghazanfar, and
Muhammad Saim Hashmi

still ambiguous. Some research studies depicted that financial intermediation matters for
economic growth (Murthy et al., 2014; A. K. Sahoo et al., 2014; Sinha & Shastri, 2021; Türsoy
& Faisal, 2018; Ventura, 2008; Yakubu & Abdallah, 2021) while others revealed that it has
inimical impact on economic growth (Boďa & Zimková, 2021; Ekpenyong & Acha, 2011; John
& Nwekemezie, 2019; Magwedere et al., 2021; Sulaiman et al., 2015a; Zaghdoudi et al., 2013).
Despite several research studies on subject matter, most research studies in Pakistan (Demirhan
et al., 2011; Kar et al., 2011; Tang et al., 2016; Yucel, 2009) focuses on examining the impact
of financial development on economic growth by using “bank credit to private sector” as a
proxy of financial development. The effect of other dimensions of the financial markets (e.g.,
foreign direct investment) on growth is barely discussed. In this way, this study is a contribution
in global debate on financial markets with context of Pakistan.
Undoubtedly, single proxies of financial markets are discussed in present studies. The most
used individual indicators are broad money, credit to private sector, savings, interest rates and
so on. Financial markets activities are not fully reflected by a single measure. Therefore, we
construct an index of financial market based on three broad indicators to provide a more
comprehensive analysis and to differ from prior studies.
This research study strengthens the literature of financial markets-economic growth in two
different ways. Firstly, this one is the first study which investigates the impact of financial
markets on economic growth with context of Pakistan. Secondly, it is the only research study
which examines the short and long run impact of financial markets on economic growth by
applying the vector error correction model (VECM) framework on recent data.
This research paper is divided into different sections, relevant literature is presented in
section 2, section 3 presents data and analytical strategy, section 4 depicts the finding of the
study, and concluding remarks are presented in last section.

2. LITERATURE REVIEW
The relation between financial market and economic growth is examined by the seminal work
of Patrick (1966) in terms of supply –leading hypothesis and demand following hypothesis.
Supply leading hypothesis reveals that economic growth is the result of financial deepening. It
postulates that optimal resource allocation is caused by financial sector development (Hurlin &
Venet, 2008). A well-developed financial sector give rise to financial services and gives easy
access to these financial services in anticipation to demand for them. The supply leading
hypothesis deduces that real sector growth driven by the development of the financial sector is
responded by the economy rapidly. Whereas the demand following hypothesis presumes that
economic growth induces financial development. The demand for financial services is
encouraged by growth in the real economy which in turn helps in the creation and improvement
of financial institutions (Demetriades & Hussein, 1996).
The effect of financial market on economic growth has been investigated at both cross
country and country specific level with indecisive findings. While conducting cross country
analysis, Levine (2001) applied different panel approaches by using data of 71 countries to
investigate the impact of financial market on economic growth. The authors revealed that
financial market positively drives economic growth across different countries. Similarly,
Atindéhou et al. (2005) investigated the relationship between financial market and economic
growth in West African countries within the Economic Community of West African States
(ECOWAS). Findings of the study from the panel vector autoregressive (VAR) model revealed
that economic growth is directly influenced by financial market. However, Adusei and Kofi
Afrane (2013) investigated the impact of financial market of credit unions on economic growth
by using a multi country analysis. The authors revealed that economic growth is significantly

https://iaeme.com/Home/journal/IJM 312 editor@iaeme.com

 Analyzing the Impact of Financial Market on Economic Growth: Evidence from Pakistan

influenced by financial market by applying a generalized method of moment’s panel technique

on data spanning 1995-2011. Likewise, Yakubu and Abdallah (2021) accessed the impact of
financial market on economic growth by applying different econometric approaches on the data
gathered from 28 countries for the period of 2010-2019 in both developed and developing
countries.
The authors generalized that the level of financial intermediation positively drives the
economic growth by using different measures of intermediation. In contrast to positive effects,
Zaghdoudi et al. (2013) revealed that economic growth is negatively affected by banking
intermediation in the Middle East and North Africa (MENA) countries.
However, Ventura (2008) accessed the impact of financial market at the country specific
level i.e., Colombia. The researcher investigated the impact of financial market on economic
growth in both short and long run periods by using the ARDL approach. Similarly, Murthy et
al. (2014) investigated the long run impact of financial market on economic growth by using
the Johansen cointegration approach in Ethiopia. Findings of the study revealed that bank credit
to private sector as an indicator of financial intermediation positively affects economic growth
in the long run. Furthermore, Amaira and Amairya (2014) also reported the positive effect of
financial market on economic growth by invoking the VAR technique in Tunisia. Likewise, S.
Sahoo (2014) Granger causality test also proved that economic growth is driven by financial
market stability in India. Tursoy and Faisal (2018) depicted that economic growth is affected
by deposit growth (a measure of financial depth) by using ARDL model in the context of
Cyprus. In contrast to prior results, Acha (2011) witnessed no direct impact of financial market
on the economic growth in Nigeria. Likewise, Sulaiman et al. (2015b) and John and
Nwekemezie (2019) revealed that economic growth is not motivated by financial
intermediation in Nigeria.
On the base of reviewed literature, the relationship between financial market and economic
growth remains unsettled due to different findings at both country- level and cross- country
level studies. We seek to contribute to the indecisive debate by assessing the impact of financial
market on economic growth in Pakistan.

3. MATERIALS AND METHODS

A research design is a theoretical framework, evaluating the range of variables, methodology
for measuring data and to explore relationship between financial market and economic growth.
The nature of the study was causal, and data was used from 1980-2018 period for financial
stability and economic growth. Dorko (2012) also used secondary data while conducting similar
study. The data sources used in this study was taken from the International Monetary Fund,
International Financial Statistics, the National Statistical Office for UNESCO, and Pakistan's
stock market. The data were collected from World Trade Indicator (WDI) a source most
credible and accurate for secondary data.

3.1. Data Analysis

The data were analyzed through different techniques like descriptive statistics and averages
were determined. Regression analysis evaluated the significance and defined the relationship
of studied variables. Unit root test is used for checking the stationary and non-stationary
variables. Further OLS Least Square Method is used to check the variable significance level.
Co-integration test and vector error correction model have been used to evaluate the long run
relationship between the variables.

https://iaeme.com/Home/journal/IJM 313 editor@iaeme.com

 Sabahat Akram, Rabia Ayyub, Waqas Younis, Muhammad Waseem Shahzad, Faheem Ghazanfar, and
Muhammad Saim Hashmi

3.2. Variables and their Proxies

Model includes five variables, including economic growth as dependent and four independent
variables which are financial development, foreign direct investment, and banking sector credit.
Secondary school enrollment is used as control variables to explain for the enabling
environment as used by (Borensztein et al., 1998).

Table 1 Description of Variables

Variables Variable explanation Measure
Independent Variable
Economic Growth (GDP) GDP growth rate used as proxy for Annual
Economic Growth percentage
Dependent Variables
Financial Development Market capitalization is used as proxy Percentage
(FD) of financial development.
Foreign direct investment Foreign direct investment Percentage
(FDI)
Banking Sector Credit Bank liquid reserves to bank assets Percentage
(BSC) ratio (%) is used as proxy of Banking
sector credit
Secondary school School enrollment, secondary (% Percentage
Enrollment (SSE) gross)

3.3. Model Specification

The study will have formulated the following models to address the objectives and empirical
analysis.
RGDP = α +β1 FD + β2FDI t + β3 BSC t + β4SSE+µ
Where:
α is a constant,
RGDP = Real Gross Domestic Product,
FDI= Foreign direct investment
BCS = Banking sector credits to private sectors.
FD =Financial development
SSE = Secondary school enrollment
βi= Coefficient of regression,
µ = Error correction term,
t = time.

4. RESULTS AND DISCUSSIONS

In results intercept of the variables under study have been examine. This would not only help
in making relationship between the variables but also help the reader in understanding the of
such variables and their correlation. The descriptive statistics results of variable under
discussion has been presented in table 2. This study was designed to find out impact of financial
market on economic growth of Pakistan. In regression model GDP growth is dependent variable
while financial market is banking sector credit, foreign direct investment are independent
variables. Secondary school enrollment is control variable.

https://iaeme.com/Home/journal/IJM 314 editor@iaeme.com

 Analyzing the Impact of Financial Market on Economic Growth: Evidence from Pakistan

Table 2 Descriptive Statistics

Variables Observation Mean Median Maximum Minimum Std. Dev
DGDP 38 4.89 4.84 10.21 1.01 2.09
DFD 38 22.76 22.01 46.53 6.78 8.93
DFDI 38 O.92 0.65 3.66 0.10 0.81
DBSC 38 19.52 20.26 31.90 8.63 7.26
DSSE 38 25.72 21.48 46.10 13.58 9.80
The values of standard deviation show the variation from mean. Low standard deviation
shows that the data points approach to be very close to mean which shows that data is
satisfactory.

4.1. Correlation Matrix

The table 3 indicates the correlations between the variables. GDP, Secondary school
enrollment, financial development, foreign direct investment, and banking sector credit all
correlate with each other.

Table 3 Correlations
DGDP DFD DFDI DBSC DSSE
DGDP 1
DFD 0.4352 1
DFDI -0.1871 0.3797 1
DBSC 0.4688 -0.2393 -0.5775 1
DSSE -0.1274 0.3652 0.2943 -0.7824 1
Result of correlation analysis shows a positive correlation of financial development with all
variables in the regression model. The relationship of financial development and DGDP is
significant and positive. The correlation coefficient is 0. 4352.While foreign direct investment
and DGDP is significantly and negatively correlated through each other and the value of
correlation coefficient for the variable is -0. 1871. The relationship among DBSC and DGDP
significant and positive and the value of correlation coefficient of the variables is 0.4688. The
relationship between DSSE and DGDP is significant and negative correlated with each other,
and value of correlation coefficient of these variables is -0.1274. The relationship among DFD
and DFDI positive and significantly correlated with each other and value of correlation
coefficient of these variables is 0.3797. The relationship between DFD and DBSC is significant
and negative correlated with each other, and value of correlation coefficient of these variables
is -0.2393. The relationship between DFD and DSSE is significant and positive correlated with
each other, and value of correlation coefficient of these variables is 0.3652. The relationship
between FDI and BSC is significant and negative correlated with each other, and value of
correlation coefficient of these variables is -0.5775. The association between DFDI and DSSE
is significant and positive correlated with each other and the value of correlation coefficient of
these variables 0.2943. The relationship between DBSC and DSSE is significant and negative
correlated by each other, and value of correlation coefficient of these variables is -0.7824.

4.2. Unit Root Test

Stationarity Properties of data is time series data for the period of the study from 1980 – 2018
was examined to test its stationarity using the Augmented Dickey-Fuller (ADF) test statistics.
“The lag length was resolved by using Hirotugu Akaike (1969) and Schwartz and Wilde (1978)
information criterion and Hirotugu Akaike (1987) final estimation Error Criterion. The number
of lags used in ADF regressions was chosen by using Akaike Information Criterion (AIC).
Table 4 indicates their results.

https://iaeme.com/Home/journal/IJM 315 editor@iaeme.com

 Sabahat Akram, Rabia Ayyub, Waqas Younis, Muhammad Waseem Shahzad, Faheem Ghazanfar, and
Muhammad Saim Hashmi

Table 4 ADF unit root test

Variables Level 1st Difference
Intercept Trend None Remarks Intercept Trend None Remarks
GDP 0.0043 0.0242 0.0777 Non stat- 0.0000 0.0000 0.0000 stationary
ionary
FD 0.0054 0.0128 0.3881 Non stat- 0.0000 0.0000 0.0000 stationary
ionary
FDI 0.0627 0.1377 0.0945 Non stat- 0.0028 0.0151 0.0001 stationary
ionary
BSC 0.8616 0.0010 0.0075 Non stat- 0.0003 0.0021 0.0000 stationary
ionary
SSE 0.9728 0.8310 0.9785 Non stat- 0.0000 0.0000 0.0000 stationary
ionary
ADF statistics with intercept are achieved by taking Akaike Information Criterion (AIC)
into account. The above table displayed that the ADF test results of time series. If ADF
estimated value is greater than their probability value in absolute terms the direction of variable
is stationary. The results suggested that the null-hypothesis (H0) of unit root can be rejected in
first difference for FD, BSC, SSE, FDI and RGDP can be rejected at this level and second
difference, respectively. All the series FD, BSC, SSE, FDI and RGDP are stationary. All the
variables are stationary at 5% level.
The unit root ADF test applied to checked that the data is stationary or not. It is establishing
that the data is stationary at 1st difference. Probability value is equal to 0.0000, probability value
of FDI is 0.0001, probability value of FD is 0.001, probability value of BSC is 0.0000,
probability value of SSE is 0.0000. The probability values are less than 5%, therefore, we are
safe in saying that null hypothesis was not supported.”

4.3. Least Squares Method

In table 5, the probability value of DFD, DBSC, DSSE appears significant and, DFDI value
insignificant. The standard error tests show that all the standard errors are less than half of their
own estimations.

Table 5 Least Squares Method

Variables Coefficient Std. Error t-Statistic Prob.
C -5.3491 2.3802 -2.2473 0.0314
DFD 0.1156 0.0313 3.6922 0.0008
DFDI 0.1131 0.4097 0.2762 0.0841
DBSC 0.2693 0.0674 3.9919 0.0003
DSSE 0.0876 0.0445 1.9666 0.0477
R-squared 0.5910
Durbin-Watson 1.7250
Prob(F-statistic) 0.0000
Least square multiple regression equation is:
RGD= -5.34941 + 0.115608*FD+0.113181*FDI + 0.269321*BSC+0.087658*SSE
Equation shows that α =-5.113012, which is intercept. The coefficient of DFD, DBSC,
DSSE and DFDI measures how a unit change in independent variable affects to the dependent
variable. According to the results, a unit change in total financial development leading to 11.6%
increase in real DGDP. Although a unit change in banking sector credit can create up to 26.9%
gain in real DGDP. Hence unit change in DFDI can increase towards 11.5% gain in real DGDP.
While a unit change in secondary school enrollment changes to 87.8% gain in real DGDP.

https://iaeme.com/Home/journal/IJM 316 editor@iaeme.com

 Analyzing the Impact of Financial Market on Economic Growth: Evidence from Pakistan

These results reflect that there is a positive relationship among financial market, banking sector
credit, foreign direct investment, secondary school enrollment and real GDP. The value of R2
for said relationship is 0.5910.
The Co-integration test was used to conclude if the variables are co-integrated with each
other. The test is essential in the times series data. Co-integration test concludes whether there
is a long run relationship among the variables.

Table 6 Co-integration test

Hypothesized No Eigenvalue Trace Critical Value Prob**

of CE(s) Statistic (0.05)
None* 0.729132 105.7129 69.8189 0.0000
At most 1* 0.615822 57.38624 47.8562 0.0050
At most 2 0.31187 21.99018 29.7971 0.2990
At most 3 0.146800 8.160421 15.4948 0.4484
At most 4 0.059920 2.286236 3.84147 0.1305
*Rejection of the hypothesis at 0.05%. **Mackinnon-Haug-Michelis(1999) p-value
Max-eigen value test indicate two co-integrating equations is at 0.05 % level. The results
also indicated that there is a long run relationship among the 4 series.
The table 6 of cointegration results exhibit the presence of cointegration between the
variables, it suggests that there is long run relationship among the variables. So, we had applied
VECM. The negative sign indicates move back to the equilibrium, and positive sign indicates
move away from the equilibrium. The co-integration equation has corrected negative and
significant value which mean that there exists short run correlation among GDP and other
variables.

Table 7 Vector Error Correction Model

Error D(DGDP) D(DFD) D(FDI) D(DBSC) D(DSSE)
Correction
CointEq1 0.101862 0.875543 0.108225 0.070563 0.430023
D(DGDP(-1)) -0.544071 0.456222 -0.091262 -0.074354 -0.986349
D(DGDP(-2)) -0.269081 0.736881 -0.035849 0.015270 -0.497594
D(DFD(-1)) -0.023729 -0.936975 -0.045845 -0.076972 0.416217
D(DFD(-2)) 0.039504 -0.428160 -0.0330992 -0.025858 -0.080125
D(DFDI(-1)) -0.633196 -1.290234 0.499414 -0.644690 0.416217
D(DFDI(-2)) -0.725161 -0.268797 0.106669 -0.636553 0.764251
D(DBSC(-1)) 0.008028 -0.131502 0.115550 -0.087122 0.046582
D(DBSC(-2)) 0.101634 -0.305053 -0.006933 -0.128093 0.312699
D(DSSE(-1) 0.065195 0.452463 0.062292 0.084112 0.383633
D(DSSE(-2)) -0.050328 0.452563 0.026760 0.022377 0.143776
C -0.034533 -0.100211 0.002669 -0.672030 0.498724
The coefficient of VECM of 0.1018 is significant and positive. The short-term change in
the relationships among the variable will be easily corrected to a stable long run relationship.
The result indicates long term relationship among the endogenous and exogenous variable. This
supports the conclusion that financial markets do have positive impact on economic growth in
Pakistan.

https://iaeme.com/Home/journal/IJM 317 editor@iaeme.com

 Sabahat Akram, Rabia Ayyub, Waqas Younis, Muhammad Waseem Shahzad, Faheem Ghazanfar, and
Muhammad Saim Hashmi

5. CONCLUSIONS AND RECOMMENDATIONS

This study examined the impact of financial development on economic growth, using variables,
such as financial development, banking sector credit and FDI. Secondary school enrollment
was used as control variable. The data used in this study was time series data for the period of
1980 to 2018, and data have been taken from WDI Economic Survey for Pakistan. We have
used the financial development to check the market condition, for banking sector performance
impact on growth we have used bank liquid reserve assets ratio and checked the FDI impact on
growth. We have measured these variables through correlation analysis, which indicates that
all the variables are significantly associated with each other. Unit root test use the stationary
and non-stationary tests of data. The unit root result show that data is stationary at first
difference whereas the probability value of first difference is significant for all the variables
and is less than 0.05. Further we have used OLS least square method to check the variable
significance level. The OLS result show that GDP, financial development, banking sector and
secondary school enrollment are significant and FDI is insignificant. Co-integration test have
been used to examine the long run relationship between the variables. To measure the long run
relationship determination vector error correction model was also used. The model shows the
long run relationship between the variables. The R2 is 0.59 which shows that 59 percent growth
is explained by financial markets in Pakistan.
The government of Pakistan should create an environment of macroeconomic stability by
encouraging the foreign investor. Human capital is one of the key elements of growth, so this
area is important for providing enabling environment to foreign investor and government
should invest on training and technical education. This study suggests that to improve
economic growth the policymakers should facilitate the creation of financial institutions
through ease in private sector lending. This is particularly important for developing countries
like Pakistan with limited access to financial services. It will help to create a legally enabling
environment to efficiently provide lending to the private sector. Government may need to focus
more attention on financial market development and provide with additional options to allocate
their income for investment. Which will eventually lead to economic growth in the long run.
The future researchers are suggested to employ the model with larger and more recent sets of
data for better understandings and findings. The study also suggests including other variables
which are missing in current study due to time and resource limitations.

REFERENCES
[1] Acha, I. A. (2011). Financial Intermediation by Banks and Economic Growth in Nigeria, 1990–
2008. Journal of Economics Sustainable Development, 2(4).

[2] Adusei, M., & Kofi Afrane, S. (2013). The Impact of credit union financial intermediation on
economic growth: a multi-country analysis. Global journal of business research, 7(5), 71-78.

[3] Agbada, A. O., & Osuji, C. (2013). An empirical analysis of trends in financial intermediation
and output in Nigeria. Global Journal of Management Business Research.

[4] Akaike, H. (1969). Power spectrum estimation through autoregressive model fitting. Annals of
the institute of Statistical Mathematics, 21(1), 407-419.

[5] Akaike, H. (1987). Factor analysis and AIC. In Selected papers of hirotugu akaike (pp. 371-
386): Springer.

https://iaeme.com/Home/journal/IJM 318 editor@iaeme.com

 Analyzing the Impact of Financial Market on Economic Growth: Evidence from Pakistan

[6] Amaira, B., & Amairya, R. (2014). Financial intermediation and economic growth in Tunisia:
an econometric investigation. International Journal of Business Behavioral Sciences, 4(3), 1-
19.

[7] Atindéhou, R. B., Gueyie*, J. P., & Amenounve, E. K. (2005). Financial intermediation and
economic growth: evidence from Western Africa. Applied Financial Economics, 15(11), 777-
790.

[8] Aziakpono, M. (2005). Financial development and economic growth in Southern Africa.
Reducing capital cost in Southern Africa, 1(1), 137-167.

[9] Boďa, M., & Zimková, E. (2021). Overcoming the loan-to-deposit ratio by a financial
intermediation measure—A perspective instrument of financial stability policy. Journal of
Policy Modeling.

[10] Borensztein, E., De Gregorio, J., & Lee, J.-W. (1998). How does foreign direct investment affect
economic growth? Journal of international Economics, 45(1), 115-135.

[11] Demetriades, P. O., & Hussein, K. A. (1996). Does financial development cause economic
growth? Time-series evidence from 16 countries. Journal of development Economics, 51(2),
387-411.

[12] Demirhan, E., Aydemir, O., & Inkaya, A. (2011). The direction of causality between financial
development and economic growth: evidence from Turkey. International Journal of
Management, 28(1), 3.

[13] Dorko, K. A. (2012). Relationship between capital market development and economic growth
in Kenya.

[14] Ekpenyong, D. B., & Acha, I. A. (2011). Banks and economic growth in Nigeria. uropean
Journal of Business Management, 3(4).

[15] Fry, M. J. (1980). Money and Capital or Financial Deepening in Economic Developments? In
Money and Monetary Policy in Less Developed Countries (pp. 107-113): Elsevier.

[16] Greenwood, J., & Jovanovic, B. (1990). Financial development, growth, and the distribution of
income. Journal of political Economy, 98(5, Part 1), 1076-1107.

[17] Haini, H. (2021). Examining the nonlinear impact of the banking sector on economic growth:
evidence from China’s Provinces. Journal of Chinese Economic Business Studies, 1-18.

[18] Hurlin, C., & Venet, B. (2008). Financial development and growth: A re-examination using a
panel Granger causality test.

[19] Jalloh, M. (2009). The role of financial markets in economic growth. WAIFEM Regional Course
on Operations Regulation of Capital Market, 27-31.

[20] John, E. I., & Nwekemezie, O. A. (2019). Effect of financial intermediation on economic
development of Nigeria. IOSR Journal of Economics Finance, 10(1), 23-32.

[21] Kar, M., Nazlıoğlu, Ş., & Ağır, H. (2011). Financial development and economic growth nexus
in the MENA countries: Bootstrap panel granger causality analysis. Economic modelling, 28(1-
2), 685-693.

https://iaeme.com/Home/journal/IJM 319 editor@iaeme.com

 Sabahat Akram, Rabia Ayyub, Waqas Younis, Muhammad Waseem Shahzad, Faheem Ghazanfar, and
Muhammad Saim Hashmi

[22] Kihombo, S., Ahmed, Z., Chen, S., Adebayo, T. S., & Kirikkaleli, D. (2021). Linking financial
development, economic growth, and ecological footprint: what is the role of technological
innovation? Environmental Science Pollution Research, 1-11.

[23] King, R. G., & Levine, R. (1994). Capital fundamentalism, economic development, and
economic growth. Paper presented at the Carnegie-Rochester Conference Series on Public
Policy.

[24] Levine, R. (2001). International financial liberalization and economic growth. Review of
international Economics, 9(4), 688-702.

[25] Magwedere, M. R., Chisasa, J., & Marozva, G. (2021). Examining the cointegrating relationship
between financial intermediation and poverty in a selected panel of developing countries.
Journal of Economic Financial Sciences, 14(1), 10.

[26] Murthy, D. S., Patra, S. K., & Samantaraya, A. (2014). Trade openness, financial development
index and economic growth: Evidence from India (1971-2012). Journal of Financial Economic
Policy.

[27] Pagano, M. (1993). Financial markets and growth: an overview. European economic review,
37(2-3), 613-622.

[28] Patrick, H. T. (1966). Financial development and economic growth in underdeveloped

countries. Economic development Cultural change, 14(2), 174-189.

[29] Purewal, K., & Haini, H. (2021a). Re-examining the effect of financial markets and institutions
on economic growth: evidence from the OECD countries. Economic Change Restructuring, 1-
23.

[30] Purewal, K., & Haini, H. (2021b). Re-examining the effect of financial markets and institutions
on economic growth: evidence from the OECD countries. Economic Change Restructuring, 1-
23.

[31] Sahoo, A. K., Sahoo, D., & Sahu, N. C. (2014). Mining export, industrial production and
economic growth: A cointegration and causality analysis for India. Resources Policy, 42, 27-
34.

[32] Sahoo, S. (2014). Financial intermediation and growth: Bank-based versus market-based
systems. Margin: The Journal of Applied Economic Research, 8(2), 93-114.

[33] Schwartz, A., & Wilde, L. L. (1978). Intervening in markets on the basis of imperfect
information: A legal and economic analysis. U. Pa. L. Rev., 127, 630.

[34] Sinha, N., & Shastri, S. (2021). Does financial development matter for domestic investment?
Empirical evidence from India. South Asian Journal of Business Studies.

[35] Sulaiman, S., Adedamola, L., Aluko, A., & Adewale, O. (2015a). Financial intermediation and
economic growth: A test for causality in Nigeria. Banks systems (10 (4)), 69-74.

[36] Sulaiman, S., Adedamola, L., Aluko, A., & Adewale, O. (2015b). Financial intermediation and
economic growth: A test for causality in Nigeria. Banks systems(10, Iss. 4), 69-74.

[37] Tang, C. F., Tiwari, A. K., & Shahbaz, M. (2016). Dynamic inter-relationships among tourism,
economic growth and energy consumption in India. Geosystem engineering, 19(4), 158-169.

https://iaeme.com/Home/journal/IJM 320 editor@iaeme.com

 Analyzing the Impact of Financial Market on Economic Growth: Evidence from Pakistan

[38] Türsoy, T., & Faisal, F. (2018). Does financial depth impact economic growth in North Cyprus?
Financial Innovation, 4(1), 1-13.

[39] Ünvan, Y. A., & Yakubu, I. N. (2020). Do bank-specific factors drive bank deposits in Ghana?
Journal of Computational Applied Mathematics, 376, 112827.

[40] Ventura, C. M. (2008). The effects of financial intermediation on Colombian economic growth.
Ensayos sobre Política Económica, 26(57), 250-281.

[41] Yakubu, I. N., & Abdallah, I. (2021). Modelling the financial intermediation function of banks
and economic growth in sub-Saharan Africa. Journal of Money Business.

[42] Yucel, F. (2009). Causal relationships between financial development, trade openness and
economic growth: the case of Turkey. Journal of Social sciences, 5(1), 33-42.

[43] Zaghdoudi, T., Ochi, A., & Soltani, H. (2013). Banking intermediation and economic growth:
some evidence from MENA countries.

https://iaeme.com/Home/journal/IJM 321 editor@iaeme.com