FINANCIAL DEVELOPMENT DETERMINANTS FOR SELECTED SAARC COUNTRIES: A PANEL DATA ANALYSIS

Abstract

The present research investigates the determinants of financial development using a panel data analysis of four SAARC countries i.e. Pakistan, India, Bangladesh and Sri Lanka. Financial development was used as dependent variable which was measured by developing a financial development index using principal component analysis, PCA, by adding five different banking and stock related variables in it. The estimation was done using fixed effect models from the time period 1996 to 2018. The results revealed that CPI, Rule of Law and corruption index were negatively related to financial development, while, GDP, Financial openness, Population, Education and Trade were positively related to financial development.