Relationship Between Economic Growth and the Banking and Insurance Trade Performance for Select Asian Countries – Panel Co-Integration Model

Literature suggests that financial institutions are the best indicators of a country's real development potential and significantly influence the economic development (Talliman et al. 1998; Goldsmith 19690. Patrick (1966) found that the most successful economies tend to be the ones that developed sophisticated financial systems at an early stage. Financial sector development (FSD) can play either a leading role in economic growth or it may take a more passive role (derived demand) in response to expanding economic needs. The paper empirically examines these relationships. Although there are studies which measure the impact of banking and insurance trade performance on the economic growth of economies, there is no study which investigates he impact of economic growth on the banking and insurance performance in low and middle income countries in South Asia. This paper examines the relationship between economic growth and banking and insurance performance in the select Asian countries using Panel Co-integration Method. This article's objective is to investigate the link between banking and insurance sector development and economic growth and hence to fill a gap in the current finance-growth nexus literature.