Barka Ahmed Barka Kashtu
International Organisation for Migration
Dr. Faisal Faisal (email: faisal@awkum.edu.pk)
Faculty of Business and Economics, Addul Wali Khan University, Mardan KP Pakistan, Faculty of Economics and Administrative Sciences, Near East University, North Cyprus Mersin
Dr. Turgut Tursoy
Faculty of Economics and Administrative Sciences, Near East University, North Cyprus Mersin
Abstract
This study aims to examine the long-run equilibrium and short-run relationships between financial development, trade openness, and economic growth in Malaysia by using a sample for the period 1982-2014. The ARDL bounds test for cointegration approach and Granger causality test were applied to investigate the relationship. In order to test the stationarity of the series, ADF and PP tests were applied, and both of them revealed that all the series are stationary at first differences. The ARDL confirmed a long-run and short-run relationship between variables.
Finally, Granger causality test revealed that there is no evidence that supports finance-led growth hypothesis, however, it revealed that financial development indirectly effect on growth process through trade openness channel.
Keywords: Financial Development, Economic Growth, Trade Openness, Granger Causality, ARDL
