Abstract:
This paper examines the relationships between economic growth and four different types of financial
development in ASEAN Regional Forum (ARF) countries over the period 1991–2011. Using principal component
analysis (PCA) to construct development indices, and a panel vector auto-regressive model to test
for Granger causalities, the study demonstrates unidirectional and bidirectional causality between the
variables. The study enhances understanding of the interrelationship between the variables, combining
different strands of the literature, and investigating countries previously neglected in this context. The
paper recommends making banking more accessible to residents without bank accounts in ARF countries
and promoting stock market development to facilitate access to investment capital in order to enhance
economic growth.
