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Financial Development, Institutional Quality and Economic Performance in East Asian Economies

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  • Law, Siong Hook
  • Habibullah, Muzafar Shah

Abstract

This paper examines the effects of financial development and institutional quality on economic performance in the East Asian economies using the panel cointegration and panel group mean fully modified OLS estimations. The empirical results based on the Solow growth model indicate that well developed institutional quality and financial market lead to the improved output per capita in East Asian economies. The effect of financial development on economic performance is larger when the financial system is embedded within a sound institutional framework. Thus, institutional improvements in these economies are important, not only in promoting economic development but also to deliver the benefits of financial development.

Suggested Citation

  • Law, Siong Hook & Habibullah, Muzafar Shah, 2006. "Financial Development, Institutional Quality and Economic Performance in East Asian Economies," Review of Applied Economics, Review of Applied Economics, vol. 2(2).
  • Handle: RePEc:ags:reapec:50150
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    References listed on IDEAS

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    More about this item

    Keywords

    financial development; quality of institutions; economic performance; Financial Economics; G20; E44;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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