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Volume 5 • Issue 1 | March 2021

Financial development, human capital and its impact on economic growth of emerging countries

Aaqib Sarwar, Muhammad Asif Khan, Zahid Sarwar, Wajid Khan

06/04/2021 152 0 0
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Financial development System GMM Economic growth Emerging countries Human capital

Abstract:

Purpose – This paper aims to investigate the critical aspect of financial development, human capital and their interactive term on economic growth from the perspective of emerging economies.

Design/methodology/approach – Data set ranged from 2002 to 2017 of 83 emerging countries used in this research and collected from world development indicators of the World Bank. The two-step system generalized method of moments is used to conduct this research within the endogenous growth model while controlling time and country-specific effects.

Findings – The findings of the study indicate that financial development has a positive and significant effect on economic growth. In emerging countries, human capital also has a positive impact on economic growth. Financial development and human capital interactively affect economic growth for emerging economies positively and significantly.

Research limitations/implications – The data set is limited to 83 emerging countries of the world. The time period for the study is 2002 to 2017.

Originality/value – This research contributes to the existing literature on human capital, financial development and economic growth. Limited research has been conducted on the impact of financial development and human capital on economic growth.

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