Abstract
The financial sector plays a significant role in the economic development of a country. The
aim of the study is to investigate the impact of financial intermediation and financial sector
efficiency on economic growth in Pakistan. The study examines time series data from 1973 to
2014 to examine long-run cointegration by employing ARDL approach GDP per capita is
used for economic growth while credit to the private sector is used as a proxy for financial
intermediation. Efficiency is measured by interest rate spread which is equal to the difference
between the lending interest rate and deposit interest rate. The results showed that financial
intermediation has a positive significant impact on the economic growth of Pakistan in both
long run and short run while financial sector efficiency has a positive impact on economic
growth only in the long run. The study concluded that Pakistan should develop modern and
stable financial institutions in order to enhance the ability of the financial sector to lend more
which in turn creates investment opportunities that contribute to economic growth and
development eventually.
Adiqa Kiani, Muhammad Ali. (2019) Impact of Financial Intermediation and Financial Sector Efficiency on Economic Growth in Pakistan, Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-17, Issue-1.
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