Development economists have long recognized the role of the financial system in the process of economic development. Financial institutions and markets anticipate future growth opportunities, were financial development tends to accelerate growth through new firm formation, increasing access to...

The authors employ panel Vector Error Correction Models (VECM) and cointegration framework to identify the existence and direction of the causal association between foreign direct investment (FDI) in financial services and financial development for 26 emerging economies for the period 2003-2015....