The Impact of Financial Stress on Economic Growth in Asian Emerging Economies: Evidence from Quantile Connectedness Approach

The global financial recession was the most severe economic downturn since the Great Depression of the 1930s. Since this episode, the concept and assessment of financial stress and the effects of financial stress have drawn greater attention. This study emphasizes assessing the impact of financial stress on economic growth in light of recent calamities that the world has endured in the aftermath of the global financial crisis, the Euro Crisis, and the COVID-19 pandemic by using the quantile regression model which demonstrates some interesting outcomes in assessing the impact of financial stress on the economic growth of Asian emerging economies in recent decades, that has seen fast economic expansion as well as integration into the worldwide economy. Moreover, the ERS unit root test confirms the non-existence of unit root, and the robustness of the model is also examined. Furthermore, analyzing how the intensity and direction of the linkages change over different quantiles of the distribution is also highlighted which is a more sophisticated learning of the relationship between financial stress and economic growth.