Open AccessDOES BANKING SECTOR DEVELOPMENT HAVE ANY ASSOCIATION WITH ECONOMIC GROWTH AND INTEREST RATES IN PAKISTAN?
Author(s) -
Muhammad Yusuf Amin,
Salman Khan,
Noor Hafizah Hassan
Publication year - 2019
Publication title -
global economics review
Language(s) - English
Resource type - Journals
eISSN - 2707-0093
pISSN - 2521-2974
DOI - 10.31703/ger.2019(iv-i).10
Subject(s) - granger causality , economics , spillover effect , inflation (cosmology) , monetary economics , causality (physics) , interest rate , broad money , exchange rate , monetary policy , macroeconomics , econometrics , physics , quantum mechanics , theoretical physics
The study aims to examine the association between banking sector development, real exchange rates, inflation rates, federal discount rates, economic growth and bank deposits in Pakistan. The study employs Johansen co-integration method and Granger causality test. The empirical results confirm for the existence of a long run relationship between banking sector development and inflation, economic growth and federal discount rates. The results of Granger causality indicate that US interest rates affect the development of the Pakistani banking sector. This confirms the existence of spillover impact.