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What determines financial development?

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  • Yongfu Huang

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Abstract

This paper studies the fundamental determinants of cross-country differences in finnancial development. Two prominent tools for addressing model uncertainty, Bayesian Model Averaging and Automatic Model Selection using PcGets, are jointly applied to investigate the financial development effects of a wide range of variables taken from various sources. The analysis suggests that the level of financial development in a country is determined by its institutional quality, macroeconomic policies, and geographic characteristics, as well as the level of income and cultural characteristics.

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Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 05/580.

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Length: 68 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:bri:uobdis:05/580

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Keywords: Financial development; Model uncertainty; Bayesian Model Averaging; PcGets;

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Citations

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Cited by:
  1. Angela González Arbeláez & Laura Capera, . "Un índice de bancarización para Colombia," Temas de Estabilidad Financiera, Banco de la Republica de Colombia 064, Banco de la Republica de Colombia.
  2. Herwartz, Helmut & Walle, Yabibal M., 2014. "Determinants of the link between financial and economic development: Evidence from a functional coefficient model," Economic Modelling, Elsevier, Elsevier, vol. 37(C), pages 417-427.
  3. Yongfu Huang, 2006. "Private investment and financial development in a globalized world," Bristol Economics Discussion Papers, Department of Economics, University of Bristol, UK 06/589, Department of Economics, University of Bristol, UK.
  4. Barry, Eichengreen, 2011. "The renminbi as an international currency," Journal of Policy Modeling, Elsevier, Elsevier, vol. 33(5), pages 723-730, September.
  5. Annabel Vanroose & Bert D’Espallier, 2009. "Microfinance and Financial Sector Development," Working Papers CEB, ULB -- Universite Libre de Bruxelles 09-040.RS, ULB -- Universite Libre de Bruxelles.
  6. Sibel Bali Eryigit, 2010. "FINANCIAL DEVELOPMENT and INSTITUTIONS: A LITERATURE REVIEW," Anadolu University Journal of Social Sciences, Anadolu University, Anadolu University, vol. 10(2), pages 111-122, May.
  7. Hatra Voghouei & M. Azail & Siong Law, 2013. "The effect of dynamic legal tradition on financial development: panel data evidence," European Journal of Law and Economics, Springer, Springer, vol. 35(1), pages 109-136, February.
  8. Sai Ding & John Knight, 2008. "Why has China Grown So Fast? The Role of Physical and Human Capital Formation," Economics Series Working Papers, University of Oxford, Department of Economics 414, University of Oxford, Department of Economics.
  9. Edgar Demetrio Tovar García, 2012. "Financial globalization and financial development in Latin America," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID, UN - RCE - CID.
  10. Edgar Demetrio Tovar García., 2012. "Financial Globalization and Financial Development in Transition Countries," Economía: teoría y práctica, Economía: teoría y práctica, Economía: teoría y práctica, vol. 36(1), pages 155-178, Enero-Jun.
  11. Maurizio Iacopetta & Alessandro Giovannini & Raoul Minetti, 2013. "Financial Markets Banks and Growth disentangling the links," Sciences Po publications, Sciences Po 2013-13, Sciences Po.
  12. Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Schumpeter is Right!," Working Papers, University of Pretoria, Department of Economics 201014, University of Pretoria, Department of Economics.
  13. John Knight & Sai Ding, 2008. "Why has China Grown so Fast? The Role of Structural Change," Economics Series Working Papers, University of Oxford, Department of Economics 415, University of Oxford, Department of Economics.
  14. Simplice Asongu, 2014. "Financial development dynamic thresholds of financial globalization: Evidence from Africa," Journal of Economic Studies, Emerald Group Publishing, Emerald Group Publishing, vol. 41(2), pages 166 - 195, March.
  15. Edgar Demetrio Tovar, 2011. "Globalización financiera y sus efectos sobre el desarrollo financiero," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, BANCO DE LA REPÚBLICA - ESPE.
  16. Pariwat Kanithasen & Vacharakoon Jivakanont & Charnon Boonnuch, 2011. "AEC 2015: Ambitions, Expectations and Challenges ASEAN's Path towards Greater Economic and Financial Integration," Working Papers, Economic Research Department, Bank of Thailand 2011-03, Economic Research Department, Bank of Thailand.
  17. Mihasonirina Andrianaivo & Charles Amo Yartey, 2009. "Understanding the Growth of African Financial Markets," IMF Working Papers, International Monetary Fund 09/182, International Monetary Fund.

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