Determining Pakistan's Financial Dependency: The Role of Financial Globalization and Corruption

Abstract

This article has analyzed the role of financial globalization and corruption in determining financial dependency in Pakistan from 1980 to 2020. For checking the stationary of the data Augmented Dickey-Fuller and Zivot-Andrew structural break unit root tests. For examining the cointegration autoregressive distributed lag method has been applied. The results explain that the level of corruption has a positive and significant impact on financial dependency in Pakistan. Financial globalization has a negative and significant impact on financial dependency in Pakistan. The estimated outcomes explain that the unemployment rate and balance of payments have a positive and significant impact on financial dependency in Pakistan. The findings of this article suggest that for the reduction of financial dependency, the government of Pakistan should increase financial globalization and depresses corruption, unemployment, and balance of payments.