The impact of financial development on economic growth: Evidence in Southeast Asia countries

Abstract

The objective of this study is to examine the impact of financial development on economic growth
of ASEAN countries. Research data was collected from 10 ASEAN countries in the period 2003- 2022.
Results of data analysis using the fixed effects model (FEM) show that financial development is represented
by three factors: Banking system development, liquid debt-to-GDP ratio and stock market capitalization-toGDP have a positive impact on the economic growth of ASEAN countries as measured by GDP per capita
of nations. Government spending and trade openness are control variables that have a positive impact on
economic growth while the inflation rate has a negative relationship with economic growth. From there, this
study offers a number of recommendations to improve financial indicators to contribute to economic growth
of ASEAN countries.