Murtala Abdu - Department of Economics, SRM IST, Chennai, India.
Selvasundaram Kumaravel - Department of Corporate Secretary Ship and Accounting Finance, SRM IST, Chennai, India.
Sagathevan Sooriyan - Department of Economics, Madras Christian College, Chennai, India.

In this paper, we study the asymmetric effect and threshold of financial development on economic growth. We present a fresh evidence using the panel threshold-ARDL (Panel-TARDL) model for the ۵ BRICS countries including Brazil, Russia, India, China and South Africa. We apply the Pool Mean Group (PMG) procedure for the estimation. The findings reveal that the long run threshold and asymmetric effects of finance taking place once the credit reached ۳۸% of GDP. The financial development significantly improve the economic growth only below the threshold point thereafter the effect becomes negative. We find no significant threshold and asymmetry in the short run. Using a ۵۸% as a threshold, we find a negative effect of finance for both the segments of the threshold and no asymmetry is detected. These suggest that any level of credit above ۳۸% of GDP will produce an adverse effect of finance on growth. The Policy implications of these results are also discussed.

Credit to Private Sector, Heterogeneous Panel Data, Panel Co-integration, Pool Mean Group Estimator, Tax Bias