Nexus Between Financial Development and Economic Growth in Selected Asia: A Post 1997 Crisis Analysis

Financial markets of Asia played a major role during post 1997-crisis period with extensive policy reforms and it leads to miraculous economic growth in some Asian nations. This paper investigates the causal relation between financial development and economic growth in panel framework with special reference to selected Asian emerging economies during the post Asian financial crisis era. A composite index is proposed to gauge financial market's depth and spread. The results support unidirectional causality from financial development to economic growth and auger the notion that financial development is a precursor to economic prosperity.