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The Effects of Financial Development and Institutional Quality on Economic Growth with the Dynamic Panel Data Generalized Moment Method Method: Evidence from the Organization for Economical Cooperation and Development Countries

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  • Ali Ahmadpour Kacho

    (Ph.D. Candidate in Economics, University of Sistan and Balochestan, Zahedan, Iran,)

  • Nazar Dahmardeh

    (Professor in Economic, University of Sistan and Baluchestan, Zahedan, Iran)

Abstract

Institutional quality and financial development (FD) have been considered as two main key of economic growth in recent literature. Regarding institutional quality, it is an essential and necessary condition to enhance FD, so in this context suitable policies are demanded. Our main aim is to survey the effects of FD and institutional quality on economic growth for the case of Economic Development and Cooperation Organization Countries in 2002-2014, using Generalized moment method method of Dynamic Panel Data. Here also we have used the mean of opinion and response, political stability and lack of violence, administrative efficiency, quality of provisions and legality and corruption control as six institutional indicators as well as the ratio of available credits for private sector in banks to gross product as FD indicator. The results show that FD and institutional quality have a positive and significant effect on economic growth in selected countries. Furthermore, from interactive effect, we found that FD may cause economic growth in developed countries due to their opportune institutional structure.

Suggested Citation

  • Ali Ahmadpour Kacho & Nazar Dahmardeh, 2017. "The Effects of Financial Development and Institutional Quality on Economic Growth with the Dynamic Panel Data Generalized Moment Method Method: Evidence from the Organization for Economical Cooperatio," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 461-467.
    • Handle: RePEc:eco:journ1:2017-03-60
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    References listed on IDEAS

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    Cited by:

    1. Nazima Ellahi & Adiqa Kausar Kiani & Muhammad Awais & Hina Affandi & Rabia Saghir & Sarah Qaim, 2021. "Investigating the Institutional Determinants of Financial Development: Empirical Evidence From SAARC Countries," SAGE Open, , vol. 11(2), pages 21582440211, April.
    2. Rachdi, Houssem & Hakimi, Abdelaziz & Hamdi, Helmi, 2018. "Liberalization, crisis and growth in MENA region: Do institutions matter?," Journal of Policy Modeling, Elsevier, vol. 40(4), pages 810-826.
    3. Munir, Sidra & Rao, Zia-ur-Rehman & Sana, S, 2019. "Financial Development, Fiscal Policy and Economic Growth: The Role of Institutional Quality in Pakistan," Journal of Finance and Accounting Research, University of Management and Technology, Lahore, vol. 1(2), pages 27-47, August.
    4. Waliu Olawale Shittu & Hammed Oluwaseyi Musibau & Sodiq Olaiwola Jimoh, 2022. "The complementary roles of human capital and institutional quality on natural resource - FDI—economic growth Nexus in the MENA region," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(6), pages 7936-7957, June.
    5. Destek, Mehmet Akif & Adedoyin, Festus & Bekun, Festus Victor & Aydin, Sercan, 2023. "Converting a resource curse into a resource blessing: The function of institutional quality with different dimensions," Resources Policy, Elsevier, vol. 80(C).
    6. Oluwaseyi Musibau, Hammed & Olawale Shittu, Waliu & Yanotti, Maria, 2022. "Natural resources endowment: What more does West Africa need in order to grow?," Resources Policy, Elsevier, vol. 77(C).

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    More about this item

    Keywords

    Institutional Quality; Financial Development; Economic Growth;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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