IMPACT OF FINANCIAL SECTOR DEVELOPMENT ON ECONOMIC GROWTH OF PAKISTAN

Abstract

Purpose: This study explores how the development of financial sector impacts the economic growth of Pakistan, and to what degrees do the determinants of financial growth influence the economic growth of the country. Further to the study, the paper makes several recommendations the government and institutions can draw policies to promote the financial sector development. Research Methodology: as to how This study is categorized as an illustrative time series. The role of financial sector is economic growth of Pakistan is investigated utilizing ARDL model. Data undertaken in the model covers the period from 1976 to 2019. One of the most reliable data sources. World Development Indicators (WDI). is used for data extraction purposes. Observational examinations are performed utilizing E-Views. Findings: The findings revealed that private sector credit and average stock market capitalization has significant positive impact on economic growth while the money supply and FDI have negative impacts. The role of inflation and trade openness was found to be insignificant. Practical Implications: • This study will prove to be a reference point for all future researchers on the matter. • It is aimed at focusing on the impact offinancial sector in the economic growth of Pakistan. • Research is targeted at providing meaningful insights to the institutions at play to gauge the this study as means of guidance in framing the impact on the economy and, by extension economic and fiscal policies ofthe countiy.