The Role of Financial Sector toward Economic Growth

This paper attempts to empirically examine the rule of financial sector toward economic growth and to determine the determinants of economic growth in some countries. The relationship between independent variables, exchange rate and total reserve, and economic growth was investigated for selected 67 countries. The data were analyzed using the OLS Method. Findings of the research showed that the total reserve is significant, while the exchange rate is not significant in explaining the economic growth for the selected 67 countries. The implication of the study is that countries need to increase their total reserves to boost economic growth. In the future, study should categorize countries according to those using pegged and unpegged exchange rate systems as to see the differences of impact on economic growth.