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Rapid rise of life expectancy in Bangladesh: Does financial development matter?

Researchers: Md Samsul Alam, Dr Md Shahidul Islam, Syed Jawad Hussain Shahzad, and Shazia Bilal

In this project we investigate the role of financial development on the rapid rise of life expectancy in Bangladesh by using a long time-series annual data covering the periods of 1972–2013. We examine the unit root properties (in order to have asymptotic distribution of the test robust to structural break) of the variables employing a structural break unit root test. The combined cointegration and autoregressive distributed lag bounds testing approach confirm the long-run association between financial development and life expectancy in the presence of globalization, income inequality, and economic growth. The long-run elasticities indicate that financial development and globalization (income inequality and economic growth) positively (negatively) affect life expectancy in Bangladesh. The time series vector error correction model Granger causality analysis indicates that the feedback effect exists between financial development and life expectancy, and income inequality and life expectancy (bi-directional effect, i.e., caused by each other). Economic growth and globalization are also found to Granger cause life expectancy (unidirectional regression, meaning that economic growth and globalization improve life expectancy but the same is not true from the opposite side). Our findings offer new insights to policy makers to improve life expectancy in Bangladesh.