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Jurnal Ekonomi Malaysia

57 (1) 2023 127 – 148

Role of Oil Prices in Financial Instability, Trade Openness and Economic Growth: Evidence from ASEAN Countries

Department of Economics
Faculty of Social Management Science
Kano State College of Education and Preliminary Studies
3145 Kano State, NIGERIA

maidalailu85@gmail.com

Department of Business Administration
Kano State Polytechnic
3401 Kano, NIGERIA.

inuwagabari@gmail.com

Faculty of Maritime Study
Universiti Malaysia Terengganu
21030 Kuala Nerus, Terengganu, MALAYSIA.

umarahali204019@gmail.com

Faculty of Arts & Social Science
Department of Economics & Development Studies
Federal University Dutse
7156 Jigawa, NIGERIA.

aminu.jakada@fud.edu.ng

Abstract

This paper examined the interaction effect of oil prices on financial instability, trade openness, and economic growth in leading ASEAN countries. Based on the data over 1970-2019, this research used the second-generation panel approach to examine the effects of this study. The results of the cross-sectional dependency (CD) test, and the slope homogeneity test showed that the slope heterogeneity exists among countries and the relationship between cross-sectional units. The findings of the co-integration have showed that financial instability, trade openness, oil prices and economic growth have a stable and long-run linkages. In addition, the findings have shown that economic growth is adversely impacted by financial instability and oil prices, and that trade openness has a positive effect on economic growth. The findings further demonstrated the negative effects on economic growth of the interaction term with oil prices and financial instability. The interaction term for oil prices and openness in trade, however, has a positive effect on leading ASEAN economies’ economic growth. Nevertheless, the findings of the causal test showed a one-way causal association between financial instability and economic growth; oil prices and economic growth. Similarly, the results confirmed the bidirectional causality between trade openness and economic growth.

Keywords

ASEAN; economic growth; financial instability; oil prices; trade openness

JEL Codes

B41, B43, C01, K32
http://dx.doi.org/10.17576/JEM-2023-5701-10
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Muhammad, M., Ahmad, I. M., Ahmad, A. U., & Jakada, A. H. (2023). Role of Oil Prices in Financial Instability, Trade Openness and Economic Growth: Evidence from ASEAN Countries. Jurnal Ekonomi Malaysia, 57(1), 127–148. http://dx.doi.org/10.17576/JEM-2023-5701-10

@article{muhammad2023role,
  title={Role of Oil Prices in Financial Instability, Trade Openness and Economic Growth: Evidence from ASEAN Countries},
  author={Muhammad, Maikudi and Ahmad, Inuwa Mukhtar and Ahmad, Ali Umar and Jakada, Aminu Hassan},
  journal={Jurnal Ekonomi Malaysia},
  volume={57},
  number={1},
  pages={127—148},
 

year={2023},
}

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