The relationship between trade openness, financial development and economic growth: Evidence from Generalized method of moments

Abstract

This study examines the effect of trade openness and financial development on economic growth four South Asian countries for the period of 1980-2017 using static and dynamic models. The results indicates that stock market development positively effect economic growth. The results validate that all three proxies of stock market perform a significant and positive role in augmenting economic growth in the sample countries. Trade openness, inflation and real interest rate significantly reduce economic growth while saving rise economic growth. The findings of this study have important policy implication for the sample countries regarding rising stock market in order to strengthen economic growth.