Financial development, institutions, and economic growth nexus: A spatial econometrics analysis using geographical and institutional proximities

Ahmad, Mahyudin; Law, Siong Hook

doi:10.1002/ijfe.2791

Cited by 6 publications

(2 citation statements)

References 81 publications

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“…Emara and El Said (2021) showed that household financial access produces a positive impact on economic growth only in the presence of the quality institutions, namely supervisory and regulatory regime with rule of law support, judicial independence, contract enforcement, corruption control and political stability. Ahmad and Law (2023) have shown that regardless of geographic location, countries with similar institutional characteristics exhibit the same levels of economic growth. Chinoda and Kapingura (2023) certified that institutions and governance exert positive effects on the relationship between financial inclusion and economic growth.…”

Section: Study Background and Definition Of Research Hypothesesmentioning

confidence: 99%

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

Jungo

2024

REPS

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PurposeThe paper aims to investigate the relationship between institutions and economic growth in developing countries, considering the role of financial inclusion, education spending and military spending.Design/methodology/approachThe study employs dynamic panel analysis, specifically two-step system generalized method of moments (GMM), on a sample of 61 developing countries over the period 2009–2020.FindingsThe results confirm that weak institutional quality, weak financial inclusion and increased military spending are barriers to economic growth, conversely, increased spending on education and gross capital formation contribute to economic growth in developing countries. Regarding the specific institutional factor, we find that corruption, ineffective government, voice and accountability and weak rule of law contribute negatively to growth.Practical implicationsThe study calls for strengthening institutions so that the financial system supports economic growth and suggests increasing spending on education to improve access to and the quality of human capital, which is an important determinant of economic growth.Originality/valueThe study contributes to scarce literature by empirically analyzing the relationship between institutions and economic growth by considering the role of financial inclusion, public spending on education and military spending, factors that have been ignored in previous studies. In addition, the study identifies the institutional dimension that contributes to reduced economic growth in developing countries.

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Section: Study Background and Definition Of Research Hypothesesmentioning

confidence: 99%

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

Jungo

2024

REPS

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“…Financial development is considered a fundamental prerequisite for achieving poverty alleviation, reducing income inequality, promoting gender equality, and fostering overall social progress (Kaur and Kapuria 2020;Abosedra et al 2021;Barik et al 2022;Singh and Jha 2023;Jha and Kırşanlı 2023). Financial inclusion takes precedence as a primary objective in the economic policies of developing and least-developed nations (Ahmad and Law 2022). It functions as a catalyst by providing diverse financial services and government schemes to vulnerable segments of society, particularly in developing countries like India.…”

Section: Introductionmentioning

confidence: 99%

Empowering Self-Help Groups: The Impact of Financial Inclusion on Social Well-Being

Survase,

Gohil

2024

JRFM

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Financial inclusion (FI) relates to the access and availability of financial services to society, especially in low-income groups. FI is pivotal in achieving 7 of the 17 Sustainable Development Goals (SDGs). This paper explores the level of FI in the rural areas of Maharashtra and measures the impact of FI on the social conditions of Self-Help Groups (SHGs) prevalent in these areas. The study is based on a 424 SHGs survey conducted in the Pune, Thane, and Palghar districts of Maharashtra, India. The impact of FI on SHGs is evaluated using a Structural Equation Model (SEM). The results of the study show that physical banking services, Business Facilitators (BFs), and Business Correspondents (BCs) improve the social conditions of rural SHGs. Additionally, BCs and BFs mediate the relationship between physical banking services and social conditions. The study also reveals an insignificant association between BCs and BFs and insurance services. The present study highlights the importance of increasing the awareness of insurance policies through financial literacy programs and making timely availability and accessibility of BCs and BFs to enhance financial inclusion in rural areas.

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Do institutional quality and its threshold matter in the sensitivity of the renewable energy transition to financial development? New empirical perspectives

Olaniyi,

Al‐Faryan,

Ogbaro

2023

Int. J Fin Econ

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The transition to renewable energy is critical for environmental sustainability, consistent with sustainable development goals (SDGs) 7, 8, 11, 12, and 13 of the United Nations Development Programme (UNDP). Scholars have identified financial development and institutional quality as significant factors determining the renewable energy transition in developing countries. This study opines that the efficiency of the financial system in supporting and providing the substantial financial implications that a switch to renewable energy necessitates depends on the quality of the institutional framework. Weak institutions in developing countries produce loopholes and inherent flaws in the financial system that facilitate corruption and opportunism, ultimately promoting dirty energy usage and technology at the expense of renewable energy. This process suggests that the interaction between financial development and institutions can either accelerate or impede the transition to renewable energy, depending on an economy's institutional architecture. Considering Africa's enormous renewable energy resources, previous research has overlooked the implications of the interplay between institutional quality and financial development in spurring Africa's transition to renewable energy. Thus, this study looks at the role of institutions in moderating the relationship between financial development and renewable energy in Africa from 1990 to 2019, using first‐ and second‐generation estimators to capture econometrics' pitfalls such as endogeneity, cross‐sectional dependence, and heterogeneity inherent in the panel dataset. This study departs from previous research in that it uses a dynamic panel threshold to determine the threshold of institutions beyond which financial development is stimulated to spur Africa's transition to renewable energy. The findings show that institutions create loopholes that allow rent‐seeking, opportunism, and sharp practices in the African financial system. These inherent flaws divert financial resources to support dirty energy and undermine the financial sector's ability to support a renewable energy transition on the continent. Also, the findings from the threshold of institutions affirm that African countries operate predominantly below the threshold of institutions, over which institutions enable financial development to expedite the continent's transition to renewable energy. The study suggests that institutional quality is essential in the relationship between financial development and Africa's shift to renewable energy. The findings' policy implications are discussed and outlined.

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Financial development, institutions, and economic growth nexus: A spatial econometrics analysis using geographical and institutional proximities

Cited by 6 publications

References 81 publications

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

Empowering Self-Help Groups: The Impact of Financial Inclusion on Social Well-Being

Do institutional quality and its threshold matter in the sensitivity of the renewable energy transition to financial development? New empirical perspectives

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