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

2019 ◽  
Vol 53 (4) ◽  
pp. 519-542 ◽  
Author(s):  
Hazwan Haini
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Financial Development ◽  
Financial Institutions ◽  
Financial Integration ◽  
Institutional Quality ◽  
Institutional Development ◽  
Positive Role ◽  
Asean Economic Community ◽  
Dynamic Panel Estimator

AbstractThis study investigates the role of financial and institutional development on economic growth in the Association of Southeast Asian Nations (ASEAN) economies from 1995 to 2017 using a dynamic panel estimator. Financial development is instrumental in promoting economic growth; however, the effect of financial institutions and financial markets can differ. In recent years, the ASEAN economies have launched financial and institutional integration initiatives towards the goal of an integrated ASEAN Economic Community, which can have a profound impact on economic growth. The estimated results show that financial institutions are positive and significant towards economic growth, while financial markets are insignificant. Equally important, institutional quality plays a significant and positive role in economic growth. More interestingly, the study finds that institutional development is complementary to financial institutions and markets. Member states should emphasise on further financial integration across the ASEAN economies, allowing for the development of financial institutions and markets alongside improvements in institutional quality to increase the effectiveness of financial development.

scholarly journals Financial Development and Foreign Direct Investment—The Moderating Role of Quality Institutions

2020 ◽  
Vol 12 (9) ◽  
pp. 3556 ◽  
Author(s):  
Mollah Aminul Islam ◽  
Muhammad Asif Khan ◽  
József Popp ◽  
Wlodzimierz Sroka ◽  
Judit Oláh
Keyword(s):  
Foreign Direct Investment ◽  
Financial Markets ◽  
Financial Development ◽  
Financial Institutions ◽  
Direct Investment ◽  
Institutional Quality ◽  
Host Countries ◽  
Depth Analysis ◽  
Belt And Road ◽  
Moderating Role

Considering the importance of foreign direct investment (FDI) inflows for the sustainable economic advancement of a host country, this paper investigates the financial development and FDI nexus, using institutional quality as a moderator. The sample consists of 79 Belt and Road Initiative (BRI) partner countries, as these countries are entering a new age of integration, foreign trade, and mutual development. The empirical findings of conventional and robust estimators show that the financial development of BRI host countries significantly attracts FDI, while the institutional quality plays a significant moderating role in this relation. The in-depth analysis offers the insight that financial markets are less attractive to FDI relative to financial institutions. Thus, policymakers are advised to uphold sound financial institutions to make the country more attractive to overseas investors, while concentration on financial markets may multiply the benefits of FDI. The results are robust to alternative proxies of the key variables and alternative methodologies.

scholarly journals Sustainable Utilization of Financial and Institutional Resources in Reducing Income Inequality and Poverty

2021 ◽  
Vol 13 (3) ◽  
pp. 1038
Author(s):  
Atta Ullah ◽  
Zhao Kui ◽  
Saif Ullah ◽  
Chen Pinglu ◽  
Saba Khan
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Financial Development ◽  
Institutional Quality ◽  
Vital Role ◽  
Electronic Government ◽  
Sustainable Utilization ◽  
One Belt One Road ◽  
Institutional Resources ◽  
Belt And Road

This study aims to determine the role of globalization, electronic government, financial development, concerning the moderation of institutional quality in reducing income inequality and poverty in One Belt One Road countries. The electronic government and regional integration of the economies of the One Belt One Road countries has increased globalization and can play a vital role in reducing income inequality and poverty. However, this globalization and digital transformation of government systems can only be beneficial in the presence of good institutional quality. The sample includes 64 One Belt One Road countries from 2003 to 2018. We employed a two-step system generalized method of moment (Sys-GMM) and a robustness check through Driscoll–Kraay standard errors regression. Our findings show that globalization, economic growth, e-government development, government expenditure, and inflation have a statistically significant and negative impact on income inequality and are key to eradicating income inequality and poverty. On the other hand, financial development, gross capital formation, and population size positively influence income inequality, which causes an increase in poverty and income inequality as financial development and population levels increase. Moderating variable institutional quality also positively impacts income inequality, which means that institutional quality in Belt and Road Countries is weak, as they are mostly developing countries that need to improve their systems. Moreover, the marginal effect also revealed that institutional quality has a corrective effect on the factors’ relationship with income inequality. Our findings endorse and conclude that globalization and e-government development improve economic growth and eradicate poverty and income inequality by boosting digitalization, investments, job creation, and wage increases for semi-skilled and unskilled human capital in Belt and Road countries. The sustainable utilization of financial and institutional resources plays a vital role in reducing income inequality and poverty in Belt and Road countries.

LATEST TRENDS AT FINANCIAL MARKETS: EXCHANGES BECOMES VIRTUAL FINANCIAL INSTITUTIONS

2006 ◽  
Vol 12 (1) ◽  
pp. 89-100
Author(s):  
Zdravko Bazdan
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Cash Flow ◽  
Financial Institutions ◽  
International Economics ◽  
Cultural Development ◽  
Electronic Trading ◽  
Stock Trading ◽  
Business Operations ◽  
National Economies

Exchanges are, by all means, the most important factors for economic growth. Many prominent ones are pillars of international economics. In national economies, they reflects not only economic, but political, social and cultural development. Cash flow is directed towards these segments of financijal markets. As oil is the blood of an economy, so is an exchange: an ingredient in the mixture of money, row materials and business operations. Also, we can state that the exchanges are the pulse of the economy of a nation. The author of the essay underlines primarily the development of stock trading. It is obvious in todays environment, that the new tendencies are towards electronic trading, which is the replacement of classical trading models. So called virtual trading today, makes exchanges virtual financial institutions.

Unpleasant Truths about Institutional and Financial Development

2019 ◽  
pp. 44-74
Author(s):  
Justin Yifu Lin ◽  
Célestin Monga
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Financial Institutions ◽  
Institutional Development ◽  
Failed State ◽  
Poor Countries ◽  
Level Of Economic Development ◽  
State Interventions ◽  
Economic Development Strategies ◽  
Theoretical Issues

This chapter refutes the linear and almost teleological approach in vogue in development economics on political and financial institutions. It briefly discusses the theoretical issues at hand and suggests that policies take into account the requirements of both time and place, which emphasizes the importance of the development level. The chapter acknowledges that institutional development problems are indeed major impediments to economic growth. But contrary to conventional wisdom, it argues that they are often correlated with the level of economic development. Seen from that perspective, the well-known weaknesses in the governance and financial sectors of many poor countries today often reflect their low level of development and the results of failed state interventions and distortions originating from erroneous economic development strategies.

scholarly journals Financial Development and Tax Revenue: How Catalytic Are Political Development and Corruption?

2018 ◽  
Vol 10 (8) ◽  
pp. 92 ◽  
Author(s):  
John Bosco Nnyanzi ◽  
John Mayanja Bbale ◽  
Richard Sendi
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Financial Market ◽  
Financial Institutions ◽  
Low Income ◽  
Political Development ◽  
Tax Revenue ◽  
Tax Revenues ◽  
The Impact ◽  
Cent Change

Increasing domestic revenue mobilization remains a challenge for many governments, particularly in low-income countries. Using a sample of East African countries, the study sets off to investigate the impact of financial development from a multi-dimensional perspective on tax revenues for the period 1990 to 2014, and how political development and the control of corruption would enhance the observed nexus. The dynamic panel results from the system GMM estimation approach indicate a significant role of financial development overall and the financial institutions and financial markets in particular. A disaggregation of the duo suggests that it is the depth of financial institutions that greatly matters for tax revenue, with a one per cent change expected to yield about 0.26 per cent change in tax collections. It is then followed by their level of accessibility, financial market depth and efficiency. We fail to find significant evidence in support of financial market access and financial institutions efficiency although the possibility for the latter seems indismissible. Further evidence points to the catalytic nature of a good institutional and political environment in pursuit of higher tax-GDP ratio via financial development. Policies to promote the depth and accessibility of financial institutions as well the depth and efficiency of financial markets in East Africa alongside well-focused anti-corruption programs and democratic governance are likely to yield better fiscal outcomes in terms of domestic tax revenues critically needed to achieve the United Nations Sustainable Development Goals. We also confirm the positive role played by the lagged tax revenue, per capita GDP, trade openness, debt-to-GDP ratio and population density in the tax effort.

Impact of remittances on economic performance in consideration of institutional quality

2020 ◽  
Vol 47 (3) ◽  
pp. 479-507
Author(s):  
Surya Nepal ◽  
Sae Woon Park ◽  
Sunhae Lee
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
South Asia ◽  
Central Asia ◽  
Financial Development ◽  
Economic Performance ◽  
Institutional Quality ◽  
Content Type ◽  
The Impact ◽  
Asian Developing Countries

PurposeThe purpose of this paper is to empirically assess the impact of remittances on the economic performance of the 16 Asian developing countries, taking account of their institutional qualities.Design/methodology/approachA panel of 16 Asian developing countries (Central Asia, South Asia, and ASEAN) over the period of 2002–2016 is employed in the analysis. To assess the impact of remittances on economic performance in consideration of institutional quality, OLS estimates as well as GMM are used.FindingsThe effect of remittances on economic growth is statistically significant. In addition, they also impact economic growth when they interact with institutional or financial development variables. For the long-run growth process of Central Asian, South Asian, and ASEAN countries, a sound and smooth institutional framework appears to be indispensable. Also, it was found that more fragile economies tend to achieve bigger growth than less fragile economies, as this kind of growth is triggered by more remittances flowing into fragile economies. However, the impact of remittances on growth does not depend on the level of ICT. FDI and financial development have positive impact on growth.Research limitations/implicationsThere are limitations to this research as well. Due to the unavailability of data, several countries had to be removed from this study. The cost of sending money might be an important variable for this study. However, the data on this variable from reliable sources are almost impossible to gather. Therefore, this variable is also not included in this research. The savings from remittances when intermediated through formal financial channels will, in fact, produce a positive allocation and distribution of resources that may eventually become an important source of growth. However, one precondition for larger and greater growth is that remittances need to be well and properly utilized by the financial sector. Therefore, quality institutions should be formed first, which can facilitate investment activities and make the flow of remittances more convenient.Originality/valueThis paper exclusively considers the case of Asian developing countries (Central Asia, South Asia, and ASEAN) to assess the impact of remittances on the economic performance of these countries, with special consideration of the interaction effects of remittances and institutional quality in these emerging Asian economies. The previous studies on the effect of remittances on growth do not conform to one concrete conclusion. This study is undertaken in a bid to get the best possible result on the impact of remittances on the growth of the selected countries, majority of which attract substantial chunk of remittances into their economies.

scholarly journals Transformation of the agricultural financial system in the age of globalisation

2017 ◽  
Vol 63 (No. 12) ◽  
pp. 548-558 ◽  
Author(s):  
Brzozowska Anna ◽  
Bubel Dagmara ◽  
Kalinichenko Antonina ◽  
 Nekrasenko Larysa
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Capital Flows ◽  
Financial Integration ◽  
Financial System ◽  
The Other ◽  
Financial Policy ◽  
Financial Flows ◽  
European Agriculture ◽  
Financial Globalisation

The paper is an attempt to address the advantages and risks connected with the wave of financial globalisation, with a focus on its impact on financial policy in European agriculture. The aim of the paper is to identify the basic conditions of the functioning and change of the financial system of agriculture under the conditions of the globalisation of financial markets. Financial globalisation, also referred to as financial integration or openness, is understood as an increase in global ties and interdependences caused by capital flows. Potentially, globalisation can bring a lot of benefits, which are manifested in an acceleration of economic growth and decreased fluctuation in consumption, which should further improve the level of overall prosperity. On the other hand, however, internationalisation of financial flows entails a range of threats, including the possibility of crisis.

Sind Finanzmärkte in “Common-law-Ländern” besser entwickelt als in “Civil-law-Ländern”?

2007 ◽  
Vol 56 (1) ◽  
Author(s):  
Uwe Vollmer
Keyword(s):  
Corporate Governance ◽  
Economic Development ◽  
Financial Markets ◽  
Interest Groups ◽  
Financial Development ◽  
Common Law ◽  
Civil Law ◽  
Institutional Development ◽  
Law And Finance ◽  
Geography Of Religion

AbstractThough the idea that formal institutions of corporate governance matter for economic development is widely accepted, it is still a matter of debate why different systems of corporate governance are dominant in different countries. While the “law-and-finance-view” asserts that the country′s affiliation to a certain legal family matters, other authors instead either emphasize the importance of geography, of religion and culture or of the dominance of interest groups for the institutional development of financial markets. This article surveys different views about the causes of financial development and presents empirical evidence on the question whether financial markets are really better developed in “common-lawcountries” than in “civil-law-countries”.

scholarly journals Corruption, Political Stability and Economic Growth

2016 ◽  
Vol 55 (4I-II) ◽  
pp. 689-702 ◽  
Author(s):  
Ghulam Shabbir ◽  
Mumtaz Anwar ◽  
Shahid Adil
Keyword(s):  
Economic Growth ◽  
Institutional Quality ◽  
Political Stability ◽  
Jel Classification ◽  
Conditional Cooperation ◽  
Positive Role ◽  
Muslim Countries ◽  
The Social ◽  
Political Turmoil

This paper gives insight of the role of political stability in investigating the two competing hypotheses in Developing Eight Muslim countries, and also investigates whether conditional liaison between corruption and political stability matters or not. The empirical findings indicate that investment, population and political stability play positive role in promoting economic growth. Corruption not only impact growth but also influenced by the institutional quality that a nation experiences. Corruption acts as sands in the wheels in the nations having higher degree of political stability, and greases the wheels in less politically stable countries such as Nigeria and Pakistan. Thus, political stability is conducive to growth, as it reduces the social unrests, political turmoil, and encourages investment, and there by economic growth. JEL Classification: C30, D73, O43, P48 Keywords: Corruption, Economic Growth, Political Stability, Conditional Cooperation

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