FINANCIAL DEVELOPMENT, ISLAMIC FINANCE, AND ECONOMIC GROWTH: AN EMPIRICAL INVESTIGATION FROM PERSPECTIVE OF GOVERNANCE

Abstract

Economic growth is the increase in the production of goods and services per head of population over a stated period of time (Oxford Dictionary). This study explores the short run and long run effect of financial development, governance, institutional quality, democracy, Islamic finance on economic growth in the time period of 2002-2020 for Pakistan. An ARDL method is applied for checking the cointegration among variables. The results indicate the existence of short run and long run cointegration among economic growth, financial development, governance, institutional quality, democracy, and Islamic finance. We recommend policy makers to provide comfortable environment and institutional support to boost sustainable inclusive economic growth after considering the above mentioned aspects especially in post covid-19 world.