Financial development and economic growth in the Philippines: a vector error correction model approach
| dc.contributor.advisor | Tecson, Gwendolyn R. | |
| dc.contributor.author | Calub, Renz Adrian T. | |
| dc.contributor.author | Llido, Christian May L. | |
| dc.date.accessioned | 2025-01-30T01:56:26Z | |
| dc.date.available | 2025-01-30T01:56:26Z | |
| dc.date.issued | 2009-10 | |
| dc.description.abstract | Theoretically and empirically, financial development has been associated with economic growth. Many studies point out the existence of a positive relationship between developing the financial sector and the growth of the real economy. The financial sector channels funds to the productive sectors of the real economy. On the other hand, there are studies asserting that real economic growth precedes financial development. The real economy demands the services of the financial sector. While the former may be true across countries, does this hold true on a case to case basis such as the Philippines? To answer this, we employ vector error correction modelling on an economic growth indicator (real GDP), financial development indicators (M2 to GDP ratio and GVA of finance), and a stock market development indicator (total value of shares traded over GDP). We also use the impulse response function to augment the results from the vector error correction model. The estimation showed that in the Philippines, financial development is preceded by economic growth, although after a certain period, financial development becomes a significant factor to economic growth. The results imply that the Philippine financial sector has not yet attained a relatively sophisticated state where its positive effect on real economy can be realized. Furthermore, while the economy and the financial sector are demand-following, this does not preclude the necessity of employing policies that could maximize the benefits from the interaction of the financial sector and the real economy. | |
| dc.identifier.uri | https://selib.upd.edu.ph/etdir/handle/123456789/4301 | |
| dc.language.iso | en | |
| dc.subject | Financial development | |
| dc.subject | Financial industry | |
| dc.subject | Economic growth | |
| dc.subject | Vector error correction | |
| dc.title | Financial development and economic growth in the Philippines: a vector error correction model approach | |
| dc.type | Thesis |