Lowering Interest Rates Could Spark Economic Growth in South Asia
The study looked at how financial development affects economic growth in South Asian countries from 1985 to 2014. They used different tests to see the relationship between economic growth and financial factors. The results showed that financial development is linked to economic growth in the long term. There is a back-and-forth relationship between economic growth and factors like M2, real interest rate, and domestic credit in the short term. Shocks in variables like M2 and stock trading value have a big impact on economic growth in the long run. The study suggests that reducing interest rate differences in South Asian countries could help boost economic growth. Policymakers should also focus on improving financial systems and enforcing rules to support growth in the region.