Political institutions and finance-growth nexus in emerging markets and developing countries: A tale of one threshold

Slesman, Ly; Baharumshah, Ahmad Zubaidi; Azman-Saini, W.N.W.

doi:10.1016/j.qref.2019.01.017

Cited by 46 publications

(59 citation statements)

References 59 publications

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“…Countries with better institutions receive more benefits from financial development than low-institutional quality countries do. Slesman et al (2019) argue that there exists a critical threshold of political institution, over which financial development has a positive effect on economic growth. Based on a dataset of 77 developing and emerging countries, they find robust evidences that good-quality political institution is an important conductor for financial development to foster economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effects of Institutional Quality on Formal and Informal Borrowing Across High-, Middle-, and Low-Income Countries

Khanh

2019

SSRN Journal

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Section: Literature Reviewmentioning

confidence: 99%

The Effects of Institutional Quality on Formal and Informal Borrowing Across High-, Middle-, and Low-Income Countries

Khanh

2019

SSRN Journal

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“…Over the past few decades, EMDEs have increasingly contributed to the global output and consumption, occupying around 70% in the period 2000–2015 ( Gruss et al., 2018 ). However, EMDEs face serious challenges as they have relatively low institutional quality combined with low financial development level as well as energy security and weak environmental protection standards ( Ghosh, 2010 ; Saidi and Mbarek, 2017 ; Slesman et al., 2019 ; Le and Ozturk, 2020 ). Hence, the detailed examination of factors influencing the economic growth of EMDEs is crucial for their stable and sustainable development.…”

Section: Introductionmentioning

confidence: 99%

The energy-growth nexus revisited: the role of financial development, institutions, government expenditure and trade openness

2020

Heliyon

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Although the energy-growth nexus has been widely investigated in the last several decades, there are still vivid debates in the energy economics field. This study evaluates the link between energy consumption and economic growth with the thorough assessment of the roles of institutional quality, government expenditure, financial development and trade openness in 46 Emerging Market and Developing Economies (EMDEs) from 1990 to 2014. By employing appropriate panel econometric techniques, cross-sectional dependence and slope heterogeneity are controlled, which helps explore the unbiased long-run effects of the determinants of economic growth as well as scrutinize the dynamic relationship among variables. The findings demonstrate that energy usage, gross fixed capital formation, government expenditure, financial development and trade openness positively and significantly impact the economic growth in the studied EMDEs. Moreover, Dumitrescu and Hurlin causality tests affirm the occurrence of feedback hypothesis in the connection between energy consumption and other variables including economic growth. Thus, it implies that energy consumption and economic growth are interdependent, which forms a basis for policy-makers to design effective energy and environmental policies. Toward the sustainable development goal, the author recommends the governments of EMDEs to contemplate the importance of finance-governance-trade relationship to economic growth alongside the implementation of energy-efficient policies.

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“…Financial development deals with the policies, processes, and strategies to enhance the financial access, depth, and efficiency of the financial institutions and financial markets. A well-developed financial system enhances economic efficiency by channeling scarce resources to the most efficient uses that lead to sustainable growth (Slesman, Baharumshah, & Azman-Saini, 2019). The impact of finance on growth has been at the center of most policy debates among the researchers over the past few decades (Ang & McKibbin, 2007;Seven & Yetkiner, 2016).…”

Section: Introductionmentioning

confidence: 99%

How Does Financial Development Impact Economic Growth in Pakistan?: New Evidence from Threshold Model

Tariq¹,

Khan²,

Rahman³

2020

JAFEB

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This study examines the nonlinear relationship between financial development and economic growth in Pakistan using the threshold regression model for the period 1980-2017. We also employed quantile regression with 0.25, 0.50, and 0.75 quantiles of conditional distribution. The quantile regression is based on minimizing of sum of squared residuals. The result indicates that economic growth responds positively to financial development when the level of financial development surpasses the threshold value of 0.151. However, when financial development lies below the threshold value (that is, 0.151), its impact on economic growth is negative. Thus, when financial development of Pakistan surpasses the threshold level, it contributes more towards economic growth since greater level of financial development contributes more to boosts economic growth. This finding reveals that economic growth reacts differently to financial development, and the relationship between financial development and economic growth is U-shaped in Pakistan. Among the other variables, physical capital, labor force, and government expenditure exert a positive effect on economic growth. Furthermore, inflation rate and trade openness have an insignificant impact on economic growth. The results of quantile regression also confirm the non-linear relationship between financial development and economic growth in Pakistan. The finding of this study suggests revamping of financial sector policies in Pakistan.

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Political institutions and finance-growth nexus in emerging markets and developing countries: A tale of one threshold

Cited by 46 publications

References 59 publications

The Effects of Institutional Quality on Formal and Informal Borrowing Across High-, Middle-, and Low-Income Countries

The Effects of Institutional Quality on Formal and Informal Borrowing Across High-, Middle-, and Low-Income Countries

The energy-growth nexus revisited: the role of financial development, institutions, government expenditure and trade openness

How Does Financial Development Impact Economic Growth in Pakistan?: New Evidence from Threshold Model

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