Finance-growth nexus in Malaysia: evidence from granger causality test / Siti Muliana Samsi

This paper examines causal linkage between bank index and economic growth in Malaysia by incorporating selected macroeconomic variables into the model. The empirical findings from the pair causality reveal that exist bidirectional causality between bank and economic growth. The study finds that the bank index granger cause economic growth and economic growth granger cause bank. This suggests that banking sector play an essential part in expl aining the changes in economic growth and vice versa in Malaysia. In other words, economic growth and banking sector can complement each other