Economic growth and financial intermediation in Southest Asia

Abstract

This study aims to determine the effect of financial intermediation on economic growth in five Southeast Asian countries namely Indonesia, Malaysia, Philippines, Singapore and Thailand, using panel data for the period 1992 to 2015. In the proposed model, the author has used the growth of the real Gross Domestic Product as the dependent variable and the independent variables were domestic credit for the private sector, international trade, inflation, economic growth of previous year and a dummy variable to differentiate the period before and after the crisis of 1997-1998. The results of this study are concluded as follows: (1) financial intermediation is negatively correlated with economic growth; (2) inflation is negatively correlated or tends to slow down the economy; (3) international trade can spur economic growth, and the previous year's growth is not statistically significant to spur economic growth; (4) state factors can make a difference in the effect of financial intermediation on economic growth.