Does Financial Development Promote Economic Globalization? Evidence from the Top and the Bottom Globalized Emerging Economies

Abstract

This paper examines the role of financial development in economic globalization using balanced panel data from 1984 to 2016. The empirical analysis considers Europe and Central Asia (ECA) and South Asia (SA) as the top and the bottom globalized emerging economies, respectively. Financial development promotes economic globalization in the top globalized developing regions in the long run. The growth in financial institutions also improves economic globalization in the ECA. The opposite finding is reported in the SA economies. The findings suggest that 'financial development-led economic globalization should not be overlooked by the policymakers of the top globalized developing regions.