Вы находитесь на странице: 1из 12




Haydory Akbar Ahmed

Dept. of Economics and Social Sciences
BRAC University
66 Mohakhali C/A, Dhaka 1212
Mobile: +880 17140462820
Email: h.a.ahmed@bracuniversity.ac.bd

Md. Gazi Salah Uddin

Senior Lecturer
Department of Business Administration, East West University
Mohakhali C/A, Dhaka, Bangladesh
Email: gsu@ewubd.edu

Naim Uddin Hasan Awrangajeb Chy.

Lecturer, Department of Economics
University of Chittagong, Bangladesh.
Email: naim780@gmail.com

Address of Correspondence (Primary Author)

Haydory Akbar Ahmed
Dept. of Economics and Social Sciences
BRAC University
66 Mohakhali C/A, Dhaka 1212
Mobile: +880 17140462820
Email: h.a.ahmed@bracuniversity.ac.bd

JEL Classification: C3, E6

Keywords: Investments, Economic Growth, Cointegration, Error Correction, Granger Causality


Haydory Akbar Ahmed 1 , Md. Gazi Salah Uddin 2 , and Naim Uddin Hasan Awrangajeb Chy. 3


Public and private investment has long been considered an important driving force behind
economic growth. This paper investigates the nexus amongst public and private investment with
economic growth in Bangladesh using annual data from 1973-1974 to 2005-2006. The time
series analysis indicates that the variables are integrated of order one i.e. I(1). Trace statistics
indicates the existence of one cointegrating relationship amongst the variables. Granger
causality, in a ECM framework, indicates that public investment has only short-run impact on
growth, private investment has no impact but income growth itself propels further long-run

JEL Classification: C3, E6

Keywords: Investments, Economic Growth, Cointegration, Error Correction, Granger Causality

1 Haydory Akbar Ahmed, Lecturer, Department of Economics and Social Sciences, BRAC University, Dhaka,

Bangladesh. Email: h.a.ahmed@bracuniversity.ac.bd

2 Md. Gazi Salah Uddin, Sr. Lecturer, School of Business, East West University, Dhaka, Bangladesh. Email:

3 Naim Uddin Hasan Awrangajeb Chy., Lecturer, Department of Economics, University of Chittagong, Bangladesh.

Email: naim780@gmail.com


Investment is imperative for economic growth. The recent extensions of neo-classical growth
models as well as theories of endogenous growth emphasize the role of investment on growth
(Barro 1991; Barro and Sala-i-Martin 1992; Mankiew, Romer and Weil 1992). There is,
however, a debate concerning the efficacy of public investment vis-à-vis private investment.
Academics and policy makers alike are discussing the role of public and private investment in
the growth process. The general consensus states that these two components have differential
impact- public investment in infrastructure and human capital increases the productivity of
private capital, however, is likely to crowd out private investment by using scarce resources.
Khan and Kumar (1997) argue that some components of the public investment are
complementary to private investment and some are substitutes. There are arguments against
public investment, which point to the fact that infrastructure may not automatically generate
growth; public investment projects in the late 1970s and 1980s in Asia and Africa has failed to
generate desired impact due to dubious quality (Krueger and Orsmond 1990). The failure, in fact,
points to the deficient utilization of public investment projects. This failure is a testimony
towards governance and development management problems. These issues are important but do
not necessarily refer to the failure of public investment in generating economic growth. Recent
developments in growth theory emphasize the role of human capital in attaining economic
growth (Lucas 1988; Romer 1989). Public investment in human capital development through
education and health-care is likely to enhance productive capacity of the factors of production,
and/or lead to innovation and technological progress.

For a developing country like Bangladesh investment is crucial for development and growth. A
large number of public goods and infrastructure are financed by public investment, which
constitutes the Annual Development Program (ADP) of the National Budget. GDP growth in
Bangladesh in the past decade or so has been impressive and was above six per cent and
Investment-GDP ratio has been on the rise which stood at 24.7 per cent in 2005-2006. Public
investment was about 6.4 per cent in 1995-1996, which declined to six per cent in 2005-2006.
Private investment, on the other hand, was 13.6 per cent in 1995-1996 and rose to 18.7 per cent
in 2005-2006 (GoB, 2007). Since 1990s, the share of ADP in physical infrastructure, education,
health & population, industry and energy, agriculture and water resources has steadily increased.
In 1990-1991, these sectors accounted for almost 70 per cent of the ADP allocation. In 2005-
2006, this share increased to almost 90 per cent. We can find incremental allocation to energy
sector, physical infrastructure, and health and population. ADP allocation for Physical
infrastructure accounted for 18.6 per cent in 1990-1991, which increased to 24.68 per cent in
2005-2006 (GoB, 2008).

The financial sector in Bangladesh has evolved overtime and plays a crucial role. Since mid
1980s the financial sector underwent a series of reforms. The Financial Sector Reform Program
(FSRP) that began in early 1990 brought a large reform of the banking sector as well as the
financial sector as a whole. We observed liberalization of interest rate policy, bank supervision
and new regulations were developed, central bank was strengthened and the role of financial
market received new impetus in the growth process. Private credit is considered as one of the
key indicators of financial development in the existing literature (Levine 1997; Levine-Zervos
1998; Beck-Levine-Loyaza 2000). There are a number of studies investing the nexus between

economic growth and financial sector in Bangladesh using private sector’s borrowing from the
banking sector i.e. private credit as a variable (Rahman, 2004; Islam, Habib and Khan, 2004).

There is, however, a gap of empirical analysis investigating the link between economic growth,
private and public investment. This paper investigates the impact of public as well as private
investment on GDP growth in Bangladesh using ADP as proxy for public investment and private
sector’s borrowing from the banking sector i.e. private credit as proxy for private investment
using time series data for the period 1974-1975 to 2005-2006. We envisage this research will fill
the gap and open a new dimension for empirical research that links public and private investment
spending with economic growth for a small developing country like Bangladesh. The rest of the
paper is organized as follows: Section II discusses a brief literature review, Section III discusses
the analytical framework and empirical results, and finally Section IV draws conclusion.

Section II

Literature Review:

The empirical literature investigating the impact of public sending on economic growth has
resulted into a plethora of research. Most of these studies use cross country panel framework,
which also investigate the efficacy of the structural adjustment programs for the third world
countries. These studies analyze the impact both at aggregate as well as disaggregate level.
Gregoriou and Ghosh (2009) investigate the impact of government expenditure on growth, in a
heterogeneous panel for 15 developing countries using data spread over a period of 28 years.
Using GMM techniques, the study shows that countries with substantial government expenditure
have strong growth effects, which vary considerably across the nations. Bose, Haque and Emran
(2007) examine the growth effects of government expenditure for a panel of 30 developing
countries over the 1970s and 1980s, with a particular focus on disaggregated government
expenditures. The study finds- first, the share of government capital expenditure in GDP is
positively and significantly correlated with economic growth, but current expenditure is
insignificant. Second, at the disaggregated level, government investment in education and total
expenditures in education are the only outlays that are significantly associated with growth once
the budget constraint and omitted variables are taken into consideration. Herrera and Pang (2005)
investigates the efficacy of public spending using efficiency frontier approach for 140 countries
using data from 1996 to 2002. They attempt to quantify such efficacy in two major parts. The
first one estimates efficiency as the distance between observed input-output combinations and an
efficiency frontier; defined as the maximum attainable output for a given level of inputs. This
frontier is estimated for several health and education output indicators by means of the Free
Disposable Hull (FDH) and Data Envelopment Analysis (DEA) techniques. Both input-
inefficiency (excess input consumption to achieve a level of output) and output-inefficiency
(output shortfall for a given level of inputs) are estimated. The second part of the paper seeks to
verify empirical regularities of the cross-country variation in efficiency. Results show that
countries with higher expenditure levels register lower efficiency scores, as well as countries
where the wage bill is a larger share of the government’s budget. Similarly, countries with higher
ratios of public to private financing of the service provision score lower efficiency, as do
countries plagued by the HIV/AIDS epidemic and those with higher income inequality.
Countries with higher aid-dependency ratios also tend to score lower in efficiency, probably due

to the volatility of this type of funding that impedes medium term planning and budgeting.
Though no causality may be inferred from this exercise, it points at different factors to
understand why some countries might need more resources than others to achieve similar
educational and health outcomes. Fan and Rao (2003) analyzes the public expenditure trend in
Asia, Africa and Latin America in a cross-country panel framework. The objective is to review
trends in government expenditures in the developing world, to analyze the causes of change, and
to develop an analytical framework for determining the differential impacts of various
government expenditures on economic growth. Contrary to common belief, it is found that
structural adjustment programs increased the size of government spending, but not all sectors
received equal treatment. As a share of total government spending, expenditures on agriculture,
education, and infrastructure in Africa; on agricultural and health in Asia; and on education and
infrastructure in Latin America, all declined as a result of the structural adjustment programs.
The impact of various types of government spending on economic growth is mixed. In Africa,
government spending on agriculture and health was particularly strong in promoting economic
growth. Asia’s investments in agriculture, education, and defense had positive growth-promoting
effects. However, all types of government spending except health were statistically insignificant
in Latin America. Structural adjustment programs promoted growth in Asia and Latin America,
but not in Africa. Bleany, Gemmell and Kneller (2000) use annual and period-averaged data for
OECD countries during 1970-1995. The endogenous growth models, such as Barro (1990),
predict government expenditure and taxation are likely to have both short-run and long-run
effects on growth. Findings of this study strongly support the endogenous growth model,
suggests that long-run fiscal effects are not fully captured by period averaging and static panel
methods. Wiig (2000) opines that low investment may circumscribe growth potential of
Bangladesh given low investment-GDP ratio vis-à-vis other South Asian countries. He further
argues that budget expenditures under the Annual Development Plan, for Bangladesh, are the
long-term investment expenditure of the government. The author uses the expenditure ratio
analysis and indicates that public expenditure does not have a real impact on human
development. Khan and Kumar (1997) examine a number of key issues concerning the extent to
which public and private investment exerts a differential effect on long-run growth of developing
countries utilizing a large sample of 95 developing countries over the period 1970 to 1990. They
find substantial difference in the impact of private and public sector investment on growth, with
private investment having a much larger impact than public investment, especially during the
1980’s. This relationship holds up even when other determinants of per capita growth are taken
into account. An analysis of the rates of return, taking into account the relative supplies of public
and private capital, suggest generally higher returns to private capital, which appear to have
increased over time. There are, however, significant regional variations in both the effect of
public and private investment on growth, and in the associated rates of return. The difference
between the effects is most apparent for Latin America and Asia, but much less pronounced for
Africa, Europe and the Middle East country groupings. There is also a significant difference
across income groups, with evidence of higher rates of return to public investment in low-income
countries than in high-income countries. Easterly and Rebelo (1993) investigate the impact of
fiscal policy on economic growth. They use cross-country data for 100 countries for the period
1970-1988 and another historical dataset, again cross-section, for 28 countries for the period
1870-1988. Their findings show that poor countries tend to depend on trade taxes; where as
developed countries rely on income taxes. Fiscal policy depends on scale of the economy
measured in terms of population; poorer countries provide public goods such as education and

have high military spending. Policy choice also depends on the type of government in power i.e.
democracy or military regime. Transport and communication have positive impact on growth
and budget surplus tend to have positive association with growth as well as private investment.
However, link between fiscal variables and growth is statistically fragile; partially due to

It transpires from literature that the impact of public investment on growth and development is
ambiguous and has differential impact. A variety of tools being employed and in cross country
cases panel estimation is used extensively. There are no country study conducted using the time
series techniques. The Bangladesh case is considered in panel framework. We are proposing to
employ time series tools to identify the short-run and long-run impact on growth resulting from
public and private investment.

Section III

Data Description:

Annual data on real income (i.e. real GDP), private credit (i.e. private sector’s borrowing from
the baking sector), annual development program (ADP) allocations for various years in
Bangladesh National Budget and implicit GDP deflator from 1973-1974 to 2005-2006 are used
for this paper. Real GDP and implicit GDP deflator (base year 1990) data are collected from UN
Statistical Division website 4 . Data on annual development program (ADP) 5 allocation and
private credit are collected from Bangladesh Economic Review (2005). We consider ADP
allocations as the government outlay of investment i.e. public investment. Private credit is the
borrowings of the private firms from the baking sector are considered as a proxy of private
investment. ADP and private credit are converted into real terms using the implicit GDP deflator.
All the data used in the study are in natural logarithmic form. This transformation can reduce the
problem of heteroscedasticity as log transformation compresses the scale in which the variables
are measured (Gujrati, 1995). 6 We use LY, LPC, and LADP for real GDP, real private credit and
real ADP respectively.

Analytical framework and empirical results:

The relationship between ADP expenditure, Domestic Private Credit and the national income of
a nation can be expressed in the following model
Yt = α + β 1 PCt + β 2 ADPt + ε t (1)

where, Yt is real gross domestic product (GDP) and PC t is the real domestic private credit of
Bangladesh and ADPt is the real annual development plan expenditure of Bangladesh and ε t is
white noise. Logarithmic transformation of the above equation and inclusion of a trend variable
would leave the basic equation as follows

4 UN Statistical Division web-database

5 Data on ADP are available in two form- planned and actual implementation. We are using the latter values for this
6 Gujrati, D., ‘Basic Econometrics’, 3rd Edition 1995, McGraw-Hill

LYt = α 0 + α 1t + β 1 LPC t + β 2 LADPt + ε t (2)

where, t is the trend variable.

The multivariate Granger 7 methodology will be applied to identify direction of causality among
the variables of interest mentioned earlier i.e. LY, LPC and LADP. The estimation procedure
begins with testing for the time series properties of the data followed by testing for the presence
of cointegration. Finally, we test for the direction of causality amongst the variables of our

Unit root test and Cointegration:

Nelson and Plosser (1982) find that most macroeconomic variables are characterized by unit-root
processes. The variables we are dealing with are most likely to have unit roots and thereby non-
stationary. The stationarity tests will allows us to identify the order of integration before we test
them for cointegration. Hence, unit root tests on the LPC, LADP and LY variables are imperative.
The Augmented Dickey-Fuller (ADF) test is widely used in this regard (Dickey and Fuller 1979,
1981). Phillips and Perron (1988), however, proposed a modification of the Dickey-Fuller (DF)
test and have developed a more comprehensive theory of unit root non-stationarity.

The Phillips-Perron (PP) test has introduced a t-statistic on the unit-root coefficient in a DF
regression that is corrected for autocorrelation and heteroskedasticity. Formally, the power of a
test is equal to the probability of rejecting a false null hypothesis. Monte Carlo simulations have
shown that the power of the various DF tests can be very low (Enders 2004:207). Maddala and
Kim (1998:107) comment that the DF test is less powerful than the PP test. Choi and Chung
(1995) assert that for low frequency data, as is the case with ours, the PP test appears to be more
powerful than the ADF test. While we run both tests, we will finally follow the findings of the
PP tests if unit root results contradict. Moreover, Phillips and Perron (PP) tests are also applied
as it is more efficient in predicting the presence of unit root with structural break in the data set.
Bangladesh underwent the Structural Adjustment Policies (SAP) since mid 1980s and the
financial sector underwent the Financial Sector Reform Policies (FSRP) from early 1990s. Thus,
it is more efficient to use the PP tests owing to the fact we are employing a relatively small
sample and there are evidences of possible structural break.

Table 1 presents the results of both the ADF and PP tests. Both tests are providing us with a
consistent set of results on unit roots with the three variables of Bangladesh considered in this
paper. Test results suggest that the variables have unit root at level with trend and intercept
included, but their first differences are stationary. Hence, we can conclude that the variables LY,
LPC and LADP are integrated of order one, I(1).

7 The method was proposed by Granger (1969) and popularized by Sims (1972).

Table 1: Unit root test results
Variable ADF Phillips-Perron (PP)
Level First Difference Level First Difference
(Trend & (Intercept) (Trend & (Intercept)
Intercept) Intercept)
LY 1.2377 -4.0987* .6228 -4.9256*
(.9999) (.0046) (.9992) (.0004)
LPC -2.5075 -4.5488*** -2.9367 -4.6141***
(.3226) (.0016) (.1650) (.0009)
LADP -2.1935 -4.7895*** -2.1935 -4.5483***
(.4769) (.0005) (.4769) (.0010)
a. Optimal lag length for ADF is selected using testing down method from a maximum lag equal to 8.
For PP tests, bandwidth is selected based on the Newey–West procedure using Bartlett kernel
b. Probability levels are: *p<.05, **p<.01, ***p<.001

Once it is established that variables are I(1), the next step is to test for existence of any
cointegrating relationship amongst the variables. The Johansen (1991) LR test of cointegration is
applied in a VAR framework and results are presented in Table 2. The appropriate VAR lag
lengths are selected using AIC criterion. Results indicate towards the presence of at least one
cointegrating relationship amongst our variables. The trace test (λ-trace) statistic rejects the null
of r ≤ 0 but cannot reject r ≥ 1 and also, the maximum eigenvalue (λ-max) test statistic rejects the
null of r = 0 but fails to reject r = 1 at five per cent level. These Eigenvalue tests based on
stochastic matrix indicate existence of the cointegrating relationship between income, private
credit and ADP expenditure. This implies that the series under consideration are driven by at
least two common trends.
Table 2: Cointegration test Results
Null Eigenvalues Trace Test Max Eigenvalue Test

λ − trace p–value λ − max p–value

r ≤0 0.468896 34.22315 0.0145 18.98395 0.0973
r ≤1 0.368745 15.23920 0.0546* 13.80138 0.0591*
r ≤2 0.046797 1.437825 0.2305 1.437825 0.2305
Note: Probability levels are: *p<.05, **p<.01, ***p<.001
The specification of the causality test assumes that the time series at hand are mean reverting
process. If the variables are I (1), Engle and Granger (1987) assert that causality must exist in, at
least, one direction. The Granger causality test is then augmented with an error correction term
(ECT) as shown below:

m m m (3)
ΔLYt = β 0 + ∑ β1i ΔLYt −i + ∑ β 2i ΔLPCt −i + ∑ β 3i ΔLADPt −i + β 4 Z t −1 + ξ1t
i =1 i =1 i =1

q q q (4)
ΔLPCt = δ 0 + ∑ δ 1i ΔLPCt −i + ∑ δ 2i ΔLYt −i + ∑ δ 3i ΔLADPt −i + δ 4 Z t −1 + ξ 2t
i =1 i =1 i =1

r r r (5)
ΔLADPt = ϕ0 + ∑ϕ1i ΔLADPt −i + ∑ϕ 2i ΔLYt −i + ∑ϕ3i ΔLPCt −i + ϕ4 Z t −1 + ξ 3t
i =1 i =1 i =1

where Zt–1 is the one period lagged ECT obtained from the long run cointegrating
relationship amongst LY, LPC and LADP. The above error correction model (ECM) implies that
for each of the model possible sources of causality are two: lagged dynamic regressors and
lagged error correction term. If estimated coefficients of either sources of causation turn out to be
significant, the null of no causality is rejected. For instance, by equation (3), given the presence
of Domestic private credit indicators, ADP expenditure cause national income, if the null of
either ∑ i =1 β 2i = 0 or β 4 = 0 is rejected. On the other hand, if we can not reject either of the null

hypothesis, it is concluded that no causation exist from independent variables to dependent

Table 3: Multivariate Granger Causality Results
3.6598 7.07808 14.8757
[.1604] [.0290]* [.0001]**
3.61476 2.5696 0.577665
∆LPC -
[0.1641] [0.2767] [0.4472]
2.38607 0.468799 0.321335
[0.3033] [0.7910] [0.5708]
a. Optimal lag length is selected by minimizing the AIC from a maximum lag of 4.
b. Probability level are: *p<.05, **p<.01, ***p<.001

Table 3 reports multivariate granger causality tests results. The literature on granger causality
documents the fact that the results of such tests are sensitive to the selection of VAR lag length.
The optimal lag length for the VAR in this paper has been selected by minimizing the AIC as
Liew (2004) proves supremacy of AIC and FPE over other selection criteria in small sample.
The observations on the results presented in Table 3 will be made for each separately. This
would help us capture the direction of causality for each case. The error-correction terms are
adjustment term toward equilibrium sub-space and also indicate to long-run causality. Since
there is only one cointegrating relationship we include the error-correction term to indicate the
long run causality. Results indicate that real ADP cause real GDP growth in the short run and
this causality is unidirectional from real ADP to real GDP and real income growth cause real
GDP to grow over time in the long run. Results also indicate that neither real ADP nor real GDP
have any impact on growth of real private credit. This is also the case for real ADP as neither
real private credit nor real GDP have any impact on ADP growth. Thus, we can conclude that

time series analysis indicates that public investment has only short-run impact on economic
growth in Bangladesh and private investment has none.

Section IV


The paper is intended to investigate the long run and short run relationship amongst real GDP
growth and growth in public and private investment. Annual Development Plan expenditure of
our nation budget is the public investment outlays and real private credit i.e. private sectors
borrowing from the banking sector is a proxy for private investment. The results indicate a
dismal picture for Bangladesh, which is not surprising. ADP implementation has been a major
challenge for the economy. Bhttacharya and Mostafa (2005) argue that higher share of public
investment reduces capital productivity in Bangladesh. The private sector’s borrowing from the
banking sector is plagued by defaults indicated by large share of non-performing loans/non-
performing assets (NPA/NPL). The share of NPL stood at around 77% 0f the total classified
loans (Bangladesh Bank, 2007). Siddique (2008) argues that the NPL is deters full potential of
the macroeconomic performance of the economy and also impinges the capital base of our
economy. Islam, Shil and Mannan (2005) argue that non-performing loans deter capital
accumulation in our country. Thus, it is imperative for the government to undertake initiatives to
guide public and private investment into productivity improvements. It can be argued that a
market friendly investment climate in Bangladesh may channel investment into productive
sectors thus propelling growth.


Barro, R. J. (1991). Economic growth in cross-section of countries, Quarterly Journal of

Economics, vol. 106, pp. 407-444.
Bangladesh Bank (2007). Bangladesh Bank Annual Report (Dhaka).
Barro, R. J. (1990). Government spending in a simple model of endogenous growth, Journal of
Political Economy, vol. 98, No.1, pp. 103-117.
Barro, R. J. and Sala-i-Martini, X. (1992). Convergence, Journal of Political Economy, vol. 100,
pp. 223-251.
Beck, T., Levine, R. and Loayza, N. (2000). Financial intermediation and growth: causality and
causes, Journal of Monetary Economics, vol. 46, pp. 31-77.
Bhattacharya, D. and Mostafa, M. G. (2005). Capital Efficiency in Bangladesh: an Analysis of
Determinants (Dhaka, Centre for Policy Dialogue).
Bleaney, M., Gemmell, N. and Kneller, R. (2001). Testing the endogenous growth model: public
expenditure, taxation and growth over the long-run, Canadian Journal of Economics, vol. 34,
No. 1, pp. 36-57.
Bose, N., Haque, M. E. and Osborn, D. R. (2007). Public expenditure and economic growth: a
disaggregated analysis for developing countries, The Manchester School, vol. 75, No. 5, pp. 533–
Choi, I. and Chung, B. (1995). Sampling frequency and the power of tests for a unit root: a
simulation study, Economics Letters, vol. 49, pp. 131-136.
Dickey, D. A. and Fuller, W. A. (1979). Distributions of the estimators for autoregressive time
series with a unit root, Journal of the American Statistical Association, vol. 74, pp. 427-431.
Easterly, W. and Rebelo, S. (1993). Fiscal policy and economic growth: an empirical
investigation, NBER working Paper No. 4499 (Cambridge, NBER).
Enders, Walter (2004). Applied Econometric Time Series, 2nd ed. (New Jersey, Willey).
Engle, R. and Granger, C. (1987). Co integration and error correction representation: estimation
and testing, Econometrica, vol. 55, pp. 251-276.
Fan, S. and Rao, N. (2003). Public spending in developing countries: trends, determination, and
impact, EPTD Discussion Paper No. 99 (Washington, D.C., IFRI)
Government of Bangladesh (2007). Bangladesh Economic Review (Dhaka, Ministry of Finance).
Government of Bangladesh (2008). Inter-temporal Movement of Sectoral Priority of Annual
Development Programme (ADP) Expenditure (Dhaka, Ministry of Finance).
Gregoriou, A. and Ghosh, S. (2009). The impact of government expenditure on growth:
empirical evidence from a heterogeneous panel, Bulletin of Economic Research, vol. 61, No. 1,
pp. 95-102.
Gujrati, Damodar (1995). Basic Econometrics, 3rd ed. (McGraw-Hill)
Herrera, S. and Pang, G. (2005). Efficiency of public spending in developing countries: an
efficiency frontier approach, Policy Research Working Paper No. 3645 (Washington, D.C.,
World Bank).
Islam, M. R., Habib, M. W. and Khan, M. H. (2004). A time series analysis of finance and
growth in Bangladesh, Quarterly Journal of Bangladesh Development Studies, vol. 30, No. 1
and 2, pp. 111-128.
Islam, M.S., Shil, N.C. and Mannan, M.A. (2005). Non-performing loans: its Causes,
Consequences and some learning, MPRA Paper No. 7708, accessed from http://mpra.ub.uni-
muenchen.de/7708/ on 05 January, 2010.

Johansen, S. (1988). Statistical analysis of cointegrated vectors, Journal of Economic Dynamics
and Control, vol. 12, pp. 131–154.
Johansen, S. and Juselius, K. (1990). Maximum likelihood estimation and inference on
cointegration: with an application to demand for money, Oxford Bulletin of Economics and
Statistics, vol. 52, pp. 169–210.
Khan, S. M. and Kumar, M. S. (1997). Public and private investment and the growth process in
developing countries, Oxford Bulletin of Economics and Statistics, vol. 59, No. 1, pp. 69-88.
Kreuger, A. and Orsmond, D. (1993). Impact of Government on Growth and Trade, NBER
Working Paper No. 3545 (Cambridge, NBER).
Levine, R. and Zervos, S. (1998). Stock markets, banks, and economic growth, American
Economic Review, vol. 88, No. 3, pp. 537-558.
Levine, R. (1997). Financial development and economic growth: views and agenda, Journal of
Economic Literature, vol. 35, No. 2, pp. 688-726.
Lucas, R. E., Jr. (1988). On the mechanics of economic development, Journal of Monetary
Economics, vol. 22, pp. 3-42.
Mankiew, N. A., Romer, D. and Weil, D. N. (1992). A contribution to the empirics of economic
growth, Quarterly Journal of Economics, vol. 107, pp. 407-437.
Maddala, Gangadharrao S. and Kim, In-Moo (1998). Unit Roots, Cointegration, and Structural
Change (Cambridge University Press).
Nelson, C. and Plosser, C. (1982). Trends and random walks in macroeconomic time series:
some evidence and implications, Journal of Monetary Economics, vol. 10, pp. 130-162.
Perron, P. (1990). Testing for a unit root in a time series with a changing mean, Journal of
Business and Economic Statistics, vol. 8, pp. 153-162.
Perron, P. (1989). The great crash, the oil price shock and the unit root hypothesis,
Econometrica, vol. 57, pp. 1361-1401.
Romer, P. A. (1989). Human capital and growth: theory and evidence, NBER Working Paper
No. 3171 (Cambridge, NBER).
Rahman, M. H. (2004). Financial development-economic growth nexus: a case study of
Bangladesh, Quarterly Journal of Bangladesh Development Studies, vol. 30, No. 3 and 4, pp.
Siddique, M. M. (2008). Non-performing loans in Bangladesh: some issues and observations,
The Bangladesh Accountant, July-Sept 2008 Issue, pp. 42-48.
Wiig, A. (2000). Bangladesh: Severe Poverty and well-functioning Economy? Chr. Michelsen
Institute Report R 2000: 8 (Bergen).