This research study has given important implications for regulators through elaborating the association between economic growth, financial openness among the five member countries of ASEAN including Philippines, Indonesia, Thailand, Malaysia, and Singapore. An insight has been provided about the relation of economic growth and trade openness from the practical aspect in ASEAN economies. Therefore, the policy makers are supported through this information to develop, overview, and revise the existing regulations and policies of financial openness. This research study has made significant contributions through analyzing the association between economic growth and financial openness from the theoretical aspect. The study has argued that the current literature is extended by this study through focusing on the developing economies of ASEAN. Banking sector is a crucial institution for any economy and economic growth is negatively influenced through collapse of the banking activities. Further, financial system comes at risk through financial openness, but it has a considerable role in the development of economies. The financial system liberalization is the main factor, which drives economic growth among the ASEAN countries. There is need for the policy makers to review and alter the existing regulations of financial openness.
The main objective of the currents study is to investigate and explore the antecedents of the convergence in ASEAN countries. Foreign direct investment, trade, government size, population are examined as the antecedents of the economic convergence in ASEAN countries. Examining the phenomena of absolute convergence among ASEAN countries is another set goal of this research. Achieving this goal obviously requires different approach, methodology wise. Cross section regression-based studies have utilized what is called ‘regression to mean’ to examine absolute convergence across countries traditional unit root testing procedure developed by Dickey and Fuller (1979) is employed to test for convergence hypothesis. Employing ADF test also serves two purposes: 1) the methods has to be used to provide input for performing simulations to apply SURADF procedure. Developed by Blundell and Bond (1998), system GMM uses additional moment conditions to serve as an improvement in terms of performance of estimators in the models developed in Arellano and Bond (1991). The implication of this finding is that economies that are more open in terms of trade and with high level of government participation are more likely to show high level of convergence to the group average real GDP per capita than economies that less open to trade with little government participation as measured by government final consumption expenditure as a percentage of GDP.