The relationship between financial development and household welfare: case study in five Asian countries

Abstract

The study presents the empirical result of the relationship between financial development and household welfare, which has been the hotly debated issue recently. To detect the nexus of financial development and household welfare, the Pedroni cointegration test is run to find out the long-run relationship between financial development and household welfare. In empirical study, it is affirmed that there exists the long-run relationship between financial development and household welfare. However, the impact of financial development on household welfare cannot be shown through Pedroni cointegration test. Thus, 2SLS GMM is deployed to identify the impact of financial development on household welfare.