An Empirical Review Of The Role Economic Growth And Financial Globalization Uncertainty Plays On Financial Development

Abstract:

Motivation: The modern world acknowledgment of the systematic and efficient role financial globalization uncertainty and economic growth plays on financial sector development brings about the hot debate among numerous researchers, institutions and experts from virtually both the growing and advanced economies looking for the essential functions of a well-developed financial system and what leads to this development in an economy. Novelty: The current study provides a critical review of past studies concerning financial globalization uncertainty and economic growth effects on both the emerging and developed economies’ financial systems across the globe, which to the best of the author’s knowledge is among the few if any review in this area exist. Data/Methodology: The author uses synthesising, theoretical analysis and systematization of empirical literature on the matter; structural analysis of how the variables relate from the conclusions of 50 relevant papers spanning the year 2015 to 2019 previously published in indexed journals for the analysis. The articles are sceptically assessed based on the extensive persisting determinants, given the theoretical perspective, the situation of the economy at hand, and the empirical feedback. Review Analysis: analytical research indicates that financial globalization uncertainty and economic growth positively affects the development of the financial sector in most developing and industrialized economies. Meanwhile, a negative or even neutral relationship seems prevalent in predominantly oil-rich countries. Policy Considerations: Based on the results of the reviewed researches the study thereby recommends that policymakers should focus on the policies that will be geared towards enhancing economic growth and continue to take advantage of financial uncertainty fear, thereby developing their financial sectors in most of the economies. However, oil-rich economies should deregulate their financial system and ease formal credit access to encourage economic activities which will, in return, enhanced financial development.