Impact of the development of financial sector on the real production sector in ASEAN countries

Mohamed Noordeen, Mohamed Imtiyaz and Abdul Razak, Dzuljastri (2022) Impact of the development of financial sector on the real production sector in ASEAN countries. Journal of Management and Muamalah, 12 (2). pp. 49-67. E-ISSN 2180-1681

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Abstract

Sustainable economic growth depends on the ability to raise the rates of accumulation of physical and human capital, to use the resulting productive assets more efficiently, and to ensure the access of the whole population to these assets. Financial development helps economic growth through allocation of scarce investments to various sectors. The countries in ASEAN region are in different stages of development process. Singapore is considered to be a developed country with GDP per capita competing with the richest countries in the world. Malaysia, Indonesia, Thailand Brunei Darussalam and Philippines are significantly developing countries with large populations and consumer base. Laos PDR, Cambodia, Vietnam and Myanmar are the countries in the least developed countries in the region. The development of financial sector is one of crucial factor to the overall development of real economic sector. This study attempts to analyse the impact of development of financial sector on the real sector according to different stages of development. The study evaluates the development of financial sector using level of domestic lending and market capitalization as independent variable and the dependent variable, GDP growth rate as an indicator for growth of real sector. The study carried regression analysis to explain the variation in the dependent variable. The results indicate that the GDP growth of Malaysia and Thailand is significantly explained by the growth of domestic lending. Because of the lack of data available for countries, Vietnam, Laos PDR, Faculty Brunei Darussalam, Cambodia and Myanmar may there were no significant statistical evidence to relationship among selected variables. This outcome of the study has certain limitation and results may different if other variables were applied. However, the study contributes significant insight to relevant stakeholders to understand the impact of the financial sector to the real sector

Item Type:	Article (Journal)
Uncontrolled Keywords:	ASEAN, Financial Sector, Real Production Sector and Domestic Lending
Subjects:	H Social Sciences > HJ Public Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr Dzuljastri Abdul Razak
Date Deposited:	01 Dec 2022 15:45
Last Modified:	01 Dec 2022 15:49
URI:	http://irep.iium.edu.my/id/eprint/101585

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