Nexus between Financial Development and Investment in Pakistan:A Vector Auto-regressive Model Approach

  • Arslan Khalid Federal Urdu University of Arts, Science and Technology Islamabad, Pakistan
DOI: https://doi.org/10.29145/2019/jqm/030106
Keywords: financial development, investment, foreign direct investment, principal component analysis, vector autoregressive model, augmented dickey fuller test

Abstract

This study has been conducted to analyze the impacts of Financial Development on Investment in Pakistan. The objectives of this study are to generate Financial Development Index for Pakistan and to analyze the impact of Financial Development on Investment along with key explanatory variables. The time period for this study is from 1975 to 2011. An index has been constructed for exact measurement of financial development by using five main indicators, and for calculation of financial development index weighted average method has been used. In our investment’s model VAR model has been for results because of different order of integration and no proves of cointegration in our data, we have also applied the causality test on our model. It has been observed by the causality test that during the period of our study financial development cause investment and investment causes financial development. By the help of impulse response function it has also been observed that the impulse of financial development has decreased the investment in Pakistan and it could be due to a fact that Pakistan is at early stage of financial development and the saved resources are not properly mobilized to investment.

Downloads

Download data is not yet available.
Published
2019-02-28
How to Cite
Khalid, A. (2019). Nexus between Financial Development and Investment in Pakistan:A Vector Auto-regressive Model Approach. Journal of Quantitative Methods, 3(1), 115-141. https://doi.org/10.29145/2019/jqm/030106
Issue
Vol 3 No 1 (2019): Summer
Section
Articles

Copyright (c) 2019 Arslan Khalid

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

JQM follows an open-access publishing policy and full text of all published articles is available free, immediately upon publication of an issue. The journal’s contents are published and distributed under the terms of the Creative Commons Attribution 4.0 International (CC-BY 4.0) license. Thus, the work submitted to the journal implies that it is original, unpublished work of the authors (neither published previously nor accepted/under consideration for publication elsewhere). On acceptance of a manuscript for publication, a corresponding author on the behalf of all co-authors of the manuscript will sign and submit a completed Copyright and Author Consent Form.