DOMESTIC CREDIT AND ECONOMIC GROWTH IN ASEAN COUNTRIES: A NONLINEAR APPROACH

The correlation between domestic credit and economic growth is an interesting research topic that attracts different views from many scholars. Particularly, most empirical studies hardly identify the nonlinear impact of domestic credit on economic growth With this study, the author attempt to overcome the limitations of earlier studies by analyzing the nonlinear impact of domestic credit on economic growth in ASEAN countries during the period 2004-2017. By employing the Generalized Method of Moment (GMM), the study greatly succeeds in confirming the inverted U-shaped nonlinear impact of domestic credit on economic growth. Accordingly, the increase in domestic credit boosts the economy However, domestic credit exceeds the optimal threshold (DC* = 97.5%) exerts a negative influence on economic growth. The results provide essential empirical evidence for ASEAN countries to launch credit policies with the aim of sustainable economic growth. (C) 2020 INT TRANS J ENG MANAG SCI TECH.