Relationship between financial and real sectors: implications for stable economic development [evidence from Thailand]
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2018
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2561
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eng
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application/pdf
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45 leaves
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eISSN
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b203296
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
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National Institute of Development Administration. Library and Information Center
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Khalil, Muhammad Azhar (2018). Relationship between financial and real sectors: implications for stable economic development [evidence from Thailand]. Retrieved from: https://repository.nida.ac.th/handle/662723737/6341.
Title
Relationship between financial and real sectors: implications for stable economic development [evidence from Thailand]
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Abstract
Economic real sector is essential for growth and development as its activities
persuade progress of economic output. The sector generates better outcomes if it is
accompanied with a healthier financial system; thus, advancement of financial sector is
a means for the growth of real sector. This study reexamine the relationship between
financial and real sectors of Thailand with the volatility analysis of GDP caused by
development of financial market. The GARCH Model, Johansen-Juselius (1990) cointegration test, and vector error correction model (VECM) approach were employed on
time series data over the first quarter of year 1993 until the second quarter of year 2017.
Consistent with past studies, both the elements of capital market (i.e. bonds and stock
markets) and the money market (i.e. credit to private sector by banks) bear a positive
relationship to the GDP. Our results show that both markets help promoting economic
growth. We can infer that differences in financial market composition and institutions
do matter, as these three major sections – bond market, stock market, and banks– do not
simultaneously develop and grow, but at a different level of their growth paths they
complement each other. Our findings suggest that there exists interdependency between
real sector and financial sector which in turn enlightens the effect of financial market
development on the GDP growth.
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Thesis (M. Econ.)--National Institute of Development Administration, 2018