Role of Finance in Economic Growth in India: An Emperical Analysis

  • Parul Mishra Assistant Professor Narayan Arya Girls P.G. College, Farrukabad U.P.


This paper uses quarterly data from 1991 to 20015 to examine the impact of financial development on economic growth in India during the post-reform reform period. This study used ADF and PP tests to identify quiescent states between variables. Since most financial variables are inherently volatile, if the study performs a regression analysis directly on highly volatile data, the results may be suspicious and unexpected. Therefore, the study conducted a fixed test and found that financial development, i.e., M3 / GDP and growth rate is integrated at the level of 5%, to the level of significant I (1). Second, Johnsoen and Jesulisu (1991) were used to find long-term relationship cointegration vectors. The sign of the M3 / GDP coefficient is positive to previous expectations. India has a positive impact on financial development. Demonstrates that financial development plays an important role in India's economic growth. Integral relations support the existence of long-term equilibrium relationships between variables in the context of India. It also reports on Granger causality, supporting the findings supporting India's financial-driven growth hypothesis. The study concludes that financial development is more conducive to long-term growth and in the long run is not the opposite as one of the determinants of economic growth. Increasing money market interest rates have a positive impact on economic growth.

Keywords: financial development, reform, economic growth, co-integration, causality.


Download data is not yet available.
How to Cite
MISHRA, Parul. Role of Finance in Economic Growth in India: An Emperical Analysis. Journal of Business Management & Quality Assurance (e ISSN 2456-9291), [S.l.], v. 3, n. 2, p. 23-36, jan. 2020. ISSN 2456-9291. Available at: <>. Date accessed: 24 feb. 2020.
Review Article