Meta-Analysis of Finance and Growth in Asia

Asia’s economic ascent over the past five decades is among the most significant transformations in modern development history. From Japan’s early industrial ascent and the rise of the Four Asian Tigers to China’s scale-driven industrialization and India’s services-led surge, the region’s experience has challenged conventional development theories. Across these varied trajectories, one constant has been the role of finance. Financial systems—whether bank-based, market-led, state-directed, or digitally driven—have both enabled and mirrored broader economic transitions.

Theoretical perspectives on the finance–growth nexus have evolved significantly since the seminal insights of Schumpeter (1912), Gurley and Shaw (1955), and Goldsmith (1959), who each emphasized the catalytic role of financial systems in promoting innovation, mobilizing savings, reducing transaction costs, and efficiently allocating capital. These early theorists laid the foundation for the “supply-leading” hypothesis, which posits that financial development precedes and stimulates economic growth by fostering capital accumulation and technological progress. This viewpoint has been revisited and expanded by contemporary endogenous growth theorists, such as Romer (1986) and Lucas (1988), who underline how financial markets and institutions enhance total factor productivity through better allocation of resources and support for innovation-driven activities (Aghion, Howitt, and Mayer-Foulkes, 2005).

To compile a robust and policy-relevant dataset for this meta-analysis, we undertook a systematic literature search designed to identify empirical studies that examine the relationship between financial development, liberalization, and economic growth in the Asian context.

Meta-analysis has emerged as a powerful tool in empirical economics for synthesizing findings across diverse studies. In research areas characterized by methodological fragmentation and contextual variability—such as the finance–growth–globalization nexus in Asia—meta-analysis offers a systematic way to assess the prevailing patterns and implications emerging from the broader body of evidence.

This chapter presents the core empirical results of the meta-analysis, beginning with meta-synthesis, followed by meta-regression analysis, robustness checks, and bias correction procedures. Before turning to the main findings, it is useful to briefly recall the structure of the dataset underpinning these analyses.

In the final stage of meta-analysis, we examine publication selection bias using a funnel plot, by conducting a goodness-of-fit test of proportional distribution and by performing an MRA test procedure consisting of a funnel-asymmetry test (FAT), a precision-effect test (PET), and a precision-effect estimate with standard error (PEESE), which are proposed by Stanley and Doucouliagos (2012) and have been used widely in recent meta-studies.

As debates about the role of finance in economic development continue to evolve, this study has sought to provide a more structured, comparative, and empirically grounded understanding of the finance–growth nexus in Asia. By synthesizing evidence from 79 studies and more than 750 effect sizes, and by systematically addressing methodological heterogeneity and publication selection bias, this meta-analysis offers a reassessment of where and how financial development contributes to economic growth across the region. The findings speak to both the promise and the complexity of finance in an interconnected Asia: while the overall relationship remains positive and statistically robust, its strength and reliability vary markedly by subregion, by the nature of financial globalization, and by the methodological choices of individual studies. This concluding chapter distills the study’s main insights, reflects on their implications for regional policy and financial reform, and outlines directions for future research.