Abstract
Corruption is considered as one of the major obstacles to the economic development of developing countries including Pakistan.
Financial development and better quality of institutions are considered momentous factors to enhance the economic growth of a
country. This study investigates the empirical relationship between corruption, financial development, institutions and economic
growth in Pakistan covering the period of 1984-2018. To achieve the objectives of the study, the Auto Regressive Distributed Lag
(ARDL) technique to co integration has been applied. The VECM Granger causality has also been applied to check the directions
amongst the variables. The empirical results show that co-integration exits amid variables. The bidirectional causation is streaming
from financial development towards economic growth and unidirectional causation is moving from corruption to economic growth.
The empirical findings also confirm that corruption is the prime cause of the slower rate of economic growth in Pakistan.
Consequently, there is a need to reduce corruption, improve the quality of institutions, and other creditors through which they
efficiently observe the borrowers and encourage them to improve the efficiency, so that they can allocate resources and this aid flows
to condense the corruption
Abdul Farooq, Sarah Arshi, Nyla Sattar. (2020) The impact of corruption and financial development on economic growth in Pakistan: Do institutions matter?, Paradigms , Vol 14, Issue 1.
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