scholarly journals Financial development and economic growth: Role of institutional quality

2009 ◽  
Vol 56 (3) ◽  
pp. 327-357 ◽  
Author(s):  
Abdelkarim Yahyaoui ◽  
Atef Rahmani
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Human Capital ◽  
Panel Data ◽  
Financial Development ◽  
Institutional Quality ◽  
The Real ◽  
Development Institutions

The objective of our work is to show the importance of a healthy institutional framework in the finance-growth relation. In this context, we start by presenting, a theoretical lighting on this subject while trying to define the concept of the governorship and to determine its various measurements. Then, we empirically test a model of growth of Solow increased by the human capital, treating relation between financial development, institutions and economic growth. The various estimates were made by Panel data Methods over the period of 1990 to 2006 for 22 developing countries. Following these estimates, it seems that the quality of the institutions is regarded as an important factor which must not be neglected in the study of the relation between the financial sphere and the real sphere.

scholarly journals The Nexus between Financial Development and Economic Growth: Panel Data Evidence from Developing Countries

2021 ◽  
Vol 14 (10) ◽  
pp. 489
Author(s):  
E. M. Ekanayake ◽  
Ranjini Thaver
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Panel Data ◽  
Least Squares ◽  
Financial Development ◽  
Panel Cointegration ◽  
Sub Saharan Africa ◽  
Explanatory Variables ◽  
Cointegration Tests ◽  
Sub Saharan

The objective of this study is to investigate the nexus between financial development (FD) in economic growth (GROWTH) in developing countries. The study uses panel data from 138 developing countries during the period 1980–2018. The relationship between financial development and economic growth is investigated using four explanatory variables that are commonly used to measure the level of financial development and several other control variables, including a dummy variable representing the financial and banking crises. The sample of 138 developing countries is also classified into six geographic regions. We have carried out panel unit-root tests and panel cointegration tests before estimating the specified models using both Panel Least Squares (Panel LS) and Panel Fully Modified Least Squares (FMOLS) methods. In addition, panel Granger causality tests have been conducted to identify the direction of causality between FD and GROWTH for each of the regions. The results of the study provide evidence of a direct relationship between FD and GROWTH in developing countries. Furthermore, there is evidence of bi-directional causality running from FD to GROWTH and from GROWTH to FD in samples of Europe and Central Asia, South Asia, and all countries, but not in East Asia and Pacific, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa.

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 Macroeconomic Determinants of Migrants’ Remittances: Evidence from a Panel of Developing Countries

2016 ◽  
Vol 6 (7) ◽  
pp. 01
Author(s):  
Safaa Tabit ◽  
Charaf-Eddine Moussir
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Interest Rate ◽  
Financial Development ◽  
Significant Influence ◽  
Real Interest Rate ◽  
Institutional Quality ◽  
The Real ◽  
Official Exchange Rate ◽  
Macroeconomic Determinants

<p>This work aims to assess the various macroeconomic determinants of migrants’ remittances for a panel of 22 developing countries highly dependent observed over the period 1990 to 2014. The results underline the importance of the origin country’s GDP, the host country’s GDP, inflation, financial development and institutional quality as major determinants of personal remittances. However, the migrant stock, the official exchange rate and the real interest rate in the country of origin do not have a significant influence on remittances received by the panel considered.</p>

scholarly journals The Impacts of Chinese FDI and China–Africa Trade on Economic Growth of African Countries: The Role of Institutional Quality

Economies ◽  
2020 ◽  
Vol 8 (3) ◽  
pp. 53
Author(s):  
Miao Miao ◽  
Qiaoqi Lang ◽  
Dinkneh Gebre Borojo ◽  
Jiang Yushi ◽  
Xiaoyun Zhang
Keyword(s):  
Economic Growth ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
African Countries ◽  
Policy Action ◽  
Mediating Role ◽  
Theoretical Perspectives ◽  
Chinese Foreign Direct Investment

While there is a consensus on the expanding importance of the China–Africa economic relationship, there is much more debate on how to portray the relationship. Thus, this study is aimed to examine the impacts of the China–Africa trade and Chinese foreign direct investment (FDI) on the growth of African countries controlling the mediating role of institutional quality. The two-step system Generalized method of moments (GMM) model is applied using robust data for the period of 2003–2017. Drawing on complementary theoretical perspectives, this study took into account the conditional effect of China–Africa trade and Chinese FDI subject to the institutional quality of African countries and the interdependence of China–Africa trade and Chinese FDI to African countries. The benign impacts of the China–Africa trade and Chinese FDI on economic growth to African countries remain contingent upon appropriate policy action to improve the institutional quality of African countries and the synergies between the China–Africa trade and Chinese FDI to African countries.

scholarly journals Tree-based approaches for understanding growth patterns in the European regions

REGION ◽  
2016 ◽  
Vol 3 (2) ◽  
pp. 23 ◽  
Author(s):  
Paola Annoni
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Institutional Quality ◽  
Growth Patterns ◽  
Multivariate Adaptive Regression Splines ◽  
Transport Infrastructure ◽  
Macroeconomic Conditions ◽  
Stage Of Development ◽  
The Eu

The paper describes an empirical analysis to understand the main drivers of economic growth in the European Union (EU) regions in the past decade. The analysis maintains the traditional factors of growth used in the literature on regional growth - stage of development, population agglomeration,<br />transport infrastructure, human capital, labour market and research and innovation - and incorporates the institutional quality and two variables which aim to reflect the macroeconomic conditions in which the regions operate. Given the scarcity of reliable and comparable regional data at the EU level, large part of the analysis has been devoted to build reliable and consistent panel data on potential factors of growth. Two non-parametric, decision-tree techniques, randomized Classication and Regression Tree and Multivariate Adaptive Regression Splines, are employed for their ability to address data complexities such as non-linearities and interaction eects, which are generally a challenge for more traditional statistical procedures such as linear regression. Results show that the dependence of growth rates on the factors included in the analysis is clearly non-linear with important factor interactions. This means that growth is determined by the simultaneous presence of multiple stimulus factors rather than the presence of a single area of excellence. Results also conrm the critical importance of the macroeconomic framework together with human capital as major drivers of economic growth of countries and regions. This is overall in line with most of the economic literature, which has persistently underlined the major role of these factors on economic growth but with the novelty that the macroeconomic conditions are here incorporated. Human capital also has an important role, with low-skilled workforce having a higher detrimental eect on growth than high-skilled. Not surprisingly, other important factors are the quality of governance and, in line with the neoclassical growth theory, the stage of development, with less developed economies growing at a faster pace than the others. The evidence given by the model about the impact of other factors on economic growth such as those on the quality of infrastructure or the level of innovation seems to be more limited and inconclusive. The analysis conclusions support the reinforcement of the EU economic governance and the conditionality mechanisms set in the new architecture of the EU regional funds 2014-2020 whose rationale is that the eectiveness of the expenditure is conditional to good institutional quality and sound economic policies.

scholarly journals Foreign Direct Investment and Economic Growth relationships: The moderation role of institutional quality

2021 ◽  
Vol 17 ◽  
pp. 41-54
Author(s):  
Vu Tuan Anh ◽  
Tran Ngoc Khanh Linh
Keyword(s):  
Economic Growth ◽  
Quantitative Methods ◽  
Institutional Quality ◽  
Secondary Data ◽  
The State ◽  
Asian Countries ◽  
Effect Model ◽  
The Impact

Most studies on the effect of the role of institutional quality on the relationship between foreign investment and economic growth have been carried out in Western countries. Very few studies on the above-mentioned relationships have been done in Asian countries during. This paper will be conducted in Asian countries using the following three models: Pooled OLS, Fixed effect model, and Random effect model. This paper uses secondary data from 10 Asian countries from 2011 to 2018. The empirical results show that (1): FDI has a positive effect on the economies of the countries. Asia between 2002 and 2018 (2) The quality of the state strengthens the impact of FDI on the economies of Asian countries between 2011 and 2018. These findings imply that if improving the quality of institutions, the state will attract more FDI and economic development The research paper is based on the scientific approach of quantitative methods to solve the problems posed, practical and effective service for the completion of the research purpose. The secondary data collected from the worldbank.org to create asymmetric data tables will be processed on STATA software.

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