Economic Growth, Corruption, and Financial Development: Evidence from Ukraine

Abstract

This study was aimed to determine the long-run as well as the short-run impact of economic growth on the financial development of Ukraine during the period of study 1996-2019. The outcome variable of the study was financial development and the independent variables include economic growth as well as corruption. The data was obtained from the official website of world development indicators as well as from the world’ bank's official website for this purpose. The findings of ARDL estimations using error-corrected versions proved that economic growth and corruption strongly influencing the financial development of Ukraine during the period of study 1996-2019. The economic growth proved to be positive while the corruption proved to be negatively influencing the financial development of Ukraine during the period of study. It is inferred from the findings of this study that the financial development of Ukraine during 1996-2019 is strongly boosted by economic growth while the same is strongly declined by corruption in the long term as well as in the short term. The policymakers in Ukraine should carefully take steps to enhance their per capita real GDP to enhance financial development. However, they need to take some series of steps to control their increasing trend of corruption, as it will harm their level of financial development. The study is generable to other countries in comparative mode with lower-middle-income level category only. Future studies may include some more indicators of corruption as well and economic growth that may influence financial development.