THE IMPACT OF TRADE OPENNESS, GDP PER CAPITA, GOVERN-MENT SPENDING, AND BANKING SECTOR DEVELOPMENT ON FI-NANCIAL DEVELOPMENT IN ASEAN-5 COUNTRIES
DOI:
https://doi.org/10.46306/volatility.v1i2.166Keywords:
Trade Openness, GDP Per Capita, Government Spending, Banking Sector Development, Financial DevelopmentAbstract
The growth of the banking sector and economic growth are key indicators of a country's success. A well-developed financial sector plays a crucial role in stimulating economic activity, while an underdeveloped financial sector can lead to liquidity constraints that hinder economic growth. This study examines the impact of trade openness, GDP per capita, government spending, and banking sector development on financial development in ASEAN-5 countries, namely Indonesia, Malaysia, the Philippines, Singapore, and Thailand, from 1981 to 2020. Using a quantitative approach, this study applies panel data regression analysis, which combines time series and cross-sectional data. The data collection methods include literature review and documentation studies. The findings indicate that trade openness, GDP per capita, government spending, and banking sector development each have a significant positive impact on financial development. This suggests that increasing trade openness enhances financial sector growth by facilitating capital flows and investments. Similarly, higher GDP per capita reflects improved economic conditions that contribute to financial sector expansion. Government spending plays a vital role in strengthening financial institutions and infrastructure, while banking sector development directly supports financial deepening and economic progress. The study concludes that both individually and collectively, these factors contribute to the financial development of ASEAN-5 countries. Strengthening policies that promote trade liberalization, economic growth, and financial sector development can further enhance financial stability and economic resilience in the region.
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