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Political Institutions and Financial Development: An Empirical Study

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  • Huang, Yongfu

Abstract

Summary This paper examines whether political institutional improvement promotes financial development, using a panel dataset of 90 developed and developing countries over 1960-99. The empirical evidence reveals a positive effect of institutional improvement on financial development at least in the short-run, particularly for lower income countries. The preliminary evidence by a before-after event study indicates that a democratic transformation is typically followed by an increase in financial development.

Suggested Citation

  • Huang, Yongfu, 2010. "Political Institutions and Financial Development: An Empirical Study," World Development, Elsevier, vol. 38(12), pages 1667-1677, December.
  • Handle: RePEc:eee:wdevel:v:38:y:2010:i:12:p:1667-1677
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