Can financial development enhance transparency?

Examining the relationship between finance, institutions and economic growth: evidence from the ASEAN economies

“…On the other hand, the significant effects of financial institutions suggest that further financial development and integration in the ASEAN economy is essential in order to promote economic growth (Dutta and Mukherjee 2018). Additionally, the study finds the rule of law to be positive and significant towards economic growth which is expected and supports many previous empirical works (La Porta et al 2000).…”

“…Furthermore, the study also includes the interaction terms of financial institutions and financial markets with the rule of law, denoted as (fi × law) it and (fi × law) it , respectively. This allows for a richer depth of specification and provides better inferences as previous empirical researches suggest that financial development is dependent on the institutional development of an economy (La Porta et al 1998), while others find that financial development can actually enhance institutional development through encouraging transparency in the banking system (Dutta and Mukherjee 2018).…”

“…Finally, other empirical studies examine the impact of financial development on institutions, which can indirectly increase growth. Dutta and Mukherjee (2018) suggest that greater financial development can encourage a transparent banking system with strong governance, which increases transparency in the legal environment thus leading to stronger institutional development. As a result, it is important to consider the interaction effects between financial development and institutions as both can have indirect impacts on economic growth.…”

“…Similarly, recent research has emphasised the role of institutional quality in promoting economic growth in the ASEAN economies (Masron 2017). Interestingly, developing strong financial institutions can promote transparency which leads to a positive feedback effect on economic growth, as a more transparent economy attracts higher levels of foreign direct investment (Dutta and Mukherjee 2018). Hence, it is essential to investigate and understand the role of financial and institutional development in economic growth, in order to identify appropriate policies that can accelerate the goals of the ASEAN Economic Community Blueprint.…”

Threefold Policies for Bank Development: Do Independence and Transparency Matter?

“…While central bank independence, macroprudential and fiscal policies have attracted academic attention, knowledge regarding their effects on bank development is scant. One exception is Dutta and Mukherjee (2018) who conclude a positive correlation between financial development and a transparency index with multiple coverage, including the release of fiscal, financial, economic, and social information. Using a dynamic panel of 155 emerging and developing countries over the period 1998-2014, this study investigates whether and how central bank independence, macroprudential transparency, and fiscal transparency along with a set of standard factors influence bank development.…”