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Openness, Institutions and Financial Development

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  • Siong Hook Law

    (University Putra Malaysia)

  • Panicos Demetriades

    (University of Leicester)

Abstract

Using dynamic panel data techniques and data from 43 developing countries during 1980 – 2001, we provide evidence which suggests that openness and institutions are important determinants of financial development. Openness, in terms of trade and capital flows, is particularly potent in promoting financial development in middle-income countries, but much weaker in low-income countries. Our findings are robust to alternative measures of financial and trade openness, as well as estimation method and sample period.

Suggested Citation

  • Siong Hook Law & Panicos Demetriades, 2006. "Openness, Institutions and Financial Development," WEF Working Papers 0012, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    • Handle: RePEc:wef:wpaper:0012
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    References listed on IDEAS

    as
    1. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2003. "Law, endowments, and finance," Journal of Financial Economics, Elsevier, vol. 70(2), pages 137-181, November.
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    More about this item

    JEL classification:

    • F19 - International Economics - - Trade - - - Other
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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