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This study analyze is the demand-following theory or supply-leading theory prevails in the Asia Pacific region. The data used is panel nine countries in 2003-2019. This study focuses on lowermiddle income countries in the Asia Pacific region: Indonesia, Cambodia, Philippines, Myanmar, Mongolia, Papua New Guinea, Solomon Islands, Timor Leste, and Vanuatu. Analysis tool is using the Granger and VAR causality test. As a result, the demand-following theory that applies to the nine Asia Pacific countries with lower middle income. Therefore, governments in thiscountries should focus on improving the economy in the non-financial sectors. Thus, the financial sector will automatically grow.

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DOI: https://doi.org/10.35308/ekombis.v8i1.5433


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