Governance and Financial Development: Evidence from the Middle East and North Africa Region

Hechmy, Badry

doi:10.33119/erfin.2016.1.2.3

Cited by 13 publications

(11 citation statements)

References 33 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This may be the major reason why institutional factors impede the growth effect of financial development in Kenya as established in the earlier section. In line with extant studies (Chinn & Ito, 2006; Hechmy, 2016; Law & Azman‐Saini, 2012; Law et al, 2013, 2018; Miletkov & Wintoki, 2009; Ng, Dewandaru, & Ibrahim, 2015), the quality of institutions needs to be above the threshold persistently before it can trigger financial development to impact positively and strongly on growth.…”

Section: Discussion Of Empirical Resultsmentioning

confidence: 63%

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Olaniyi

Oladeji

2020

Journal of Public Affairs

View full text Add to dashboard Cite

In line with the recent assertion that institutional quality matters in the way financial development influences economic growth in financial economics literature, this study examines the moderating role of institutional quality in the finance‐growth nexus in Kenya for the period 1986–2015. A fully modified ordinary least square (FMOLS) estimator is adopted to take care of endogeneity problem inherent in the relationship among the variables while error‐correction version of autoregressive distributed lag (ARDL) technique is adopted to take care of short‐ and long‐run effects. The research outputs reveal that in the short‐run institutions and finance complement and reinforce each other to enhance growth, while institutional framework in Kenya constitutes a drain that leaks out the growth benefits of financial development in the long run. It is also found that the country majorly operates below the threshold level of institutional quality required to maximize the growth benefits of financial development. This study, therefore, concludes that institutional framework guiding the operations of financial system in Kenya should be strengthened so as to block loopholes and lapses that leak out the growth benefits of finance.JEL CLASSIFICATIOND53; E02; N27; O43

show abstract

Section: Discussion Of Empirical Resultsmentioning

confidence: 63%

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Olaniyi

Oladeji

2020

Journal of Public Affairs

View full text Add to dashboard Cite

show abstract

“…However, for institutional quality to promote financial development, a reasonable level of institutional quality is required because below-the-standard institutional quality negatively impacts the financial development of an economy. Hence, when the government institutions are below the threshold level of institutional quality, they fail to significantly impact the financial development in an economy (Law et al 2013;Hechmy, 2016). The same case is found to exist in South Asia.…”

Section: Pooled Mean Group (Pmg) Estimationsmentioning

confidence: 82%

Trade and financial openness and their impact on financial development

Arif¹,

Rawat

2019

SAJBS

View full text Add to dashboard Cite

Purpose The purpose of this paper is to assess the impact of trade and financial sector openness and their simultaneous openness on financial development of South Asia. Design/methodology/approach To serve the purpose, a panel data set of four South Asian economies, namely, India, Pakistan, Sri Lanka and Bangladesh, was constituted for the period spanning from 1996 to 2015. Along with the conventional panel unit root test and co-integration test, pooled mean group estimations were used to formulate the empirical findings. Findings The findings suggested a significant negative impact of financial openness and significant positive impact of trade openness on the financial development of South Asia. The empirical evidence did not support simultaneous openness of trade and financial sector for the studied region. Originality/value The study contributes to the existing literature by analyzing the effect of trade and financial openness on financial development of South Asia. The study provides substantial evidence to the stakeholders for formulating policies that can boost financial development of the region.

show abstract

“…The estimations results obtained by these authors established that political stability, rule of law, government effectiveness and regulatory quality negatively influence the development of conventional banks proxy by their efficiency. Following these contributions, Hechmy (2016) estimated the effect of institutional development on financial development in Middle East and North Africa region during the period 1996 to 2013. By employing the General Method of Moments technique estimation, the author found a negative effect of institutional development on financial development.…”

Section: Literature Review: An Overview Of Theoretical and Empirical ...mentioning

confidence: 99%

Governance and financial development: Evidence from a global sample of 120 countries

Ondoa

Seabrook²

2020

Int. J Fin Econ

View full text Add to dashboard Cite

This study empirically investigates the impact of governance quality on financial development. The study employs a Dynamic Common Correlated Mean group technique using data from a global sample of 120 countries, among which 32 high‐ and 88 low‐income countries, for the period 2002–2017 to examine this linkage. Political stability and absence of violence, rule of law, control of corruption, regulatory quality, government effectiveness, and voice and accountability are used as proxies for governance quality, whereas financial institutions depth and credit to private sector are proxies of financial development. The following findings have been established. Regulatory quality and political stability and absence of violence are positively associated with financial development, whereas voice and accountability, and government effectiveness are negatively associated with it. Moreover, the degree of the impact of these governance indicators on financial development is relatively greater in high‐income countries as compared to low‐income countries. On the basis of these results, governments in high‐ and low‐income countries must implement the following policies in order to improve the development of their financial systems: Firstly, they should promote a better regulation quality by implementing sound policies and regulations that permit and improve private sector development. Secondly, they should maintain a stable political environment by allowing people to enjoy, but not excessively, their rights and freedoms under the constitution. Policy makers should lastly moderate their commitment towards certain public policies, such as imposition of high tax rate to the private sector.

show abstract

Governance and Financial Development: Evidence from the Middle East and North Africa Region

Cited by 13 publications

References 33 publications

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Interplay between financial sector and institutional framework in the economic growth process of Kenya

Trade and financial openness and their impact on financial development

Governance and financial development: Evidence from a global sample of 120 countries

Contact Info

Product

Resources

About