Pradhan, Rudra P.Arvin, Mak B.Hall, J.H. (John Henry)Bahmani, Sahar2017-01-102017-01-102014-11Pradhan, RP, Arvin, MB, Hall, JH & Bahmani, S 2014, 'Causal nexus between economic growth, banking sector development, stock market development, and other macroeconomic variables : the case of ASEAN countries', Review of Financial Economics, vol. 23, no. 4, pp. 155-173.1058-330010.1016/j.rfe.2014.07.002http://hdl.handle.net/2263/58452This paper examines the relationship between banking sector development, stock market development, economic growth, and four other macroeconomic variables in ASEAN countries for the period 1961–2012. Using principal component analysis for the construction of the development indices and a panel vector auto-regressive model for testing the Granger causalities, this study finds the presence of both unidirectional and bidirectional causality links between these variables. The study contributes to understanding the importance of the interrelationship between the variables and combines the different strands of the literature. It also contributes to the literature by focusing on a group of countries that have not been studied before. One particular policy recommendation is to make the banking sector more accessible for those country's inhabitants that do not have bank accounts. Another policy recommendation is to nurture stock market development, which will facilitate the increased raising of capital for investment purposes to enhance economic growth.en© 2014 Elsevier Inc. All rights reserved. Notice : this is the author’s version of a work that was accepted for publication in Review of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. A definitive version was subsequently published in Review of Financial Economics, vol. 23, no. 4, pp. 155-173, 2014, doi : 10.1016/j.rfe.2014.07.002.Banking sectorStock marketEconomic growthGranger causalityASEAN countriesPostprint Article