The Financial Intermediation and the Growth Nexus: Evidence from ASEAN Countries Palakkod Suhail*, Dr. Usman M.** *Ph.D. Research Scholar, Bharathiar University, Coimbatore, India. pkdsuhail@gmail.com **Principal, Amal College of Advanced Studies, Kerala, India. drmusman13@gmail.com Online published on 13 November, 2017. Abstract The fundamental role of financial system is to inter relate the surplus holders (Savers) of the economy with the deficit holders (borrowers and investors or entrepreneurs) of the economy. This study is based in ASEAN context. By using annual macroeconomic data (1981–2014) from 9 ASEAN countries, and applying time series techniques of Granger causality and VECM, the study analysed the relationship between investment measured by gross capital formation (GCF) and different measures of financial development, such as; bank credit, stock market capitalisation, private debt market capitalisation, etc. This relationship is referred to as supply-leading hypothesis in finance growth literature. It is observed that the supply leading hypothesis is supported in case of stock market capitalisation only. In case of bank credit, credit by other institutions and private debt market, the hypothesis is supported in one country. It is observed that the credit system in the economy did not contributed significantly to the growth of these countries in the study period Top Keywords ASEAN, causality, financial system, growth-nexus, intermediation, saving ratio. Top |