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Impact of Financial Innovation and Institutional Quality on Financial Development in Emerging Markets

Author

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  • Suha Mahmoud Alawi

    (Finance Department, Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21422, Saudi Arabia)

  • Wajih Abbassi

    (College of Business and Economics, Qassim University, Buraydah 52571, Saudi Arabia)

  • Rukhma Saqib

    (Bahria Business School, Bahria University, Islamabad 44000, Pakistan)

  • Madeeha Sharif

    (Bahria Business School, Bahria University, Islamabad 44000, Pakistan)

Abstract

Financial innovation and institutional quality play a key role in financial development. This study investigates the impact of financial innovation and institutional quality on financial development in an emerging markets setting. We used the sample of 17 emerging markets based on the availability of data from the period 1990–2020. Data were extracted from the World Development Indicator database. In this study, panel unit root, fully modified ordinary least squares and Pedroni Integration tests were applied to analyze the data. We find that financial innovation and institutional quality are significantly and positively related to financial development. Better financial innovation increases financial development, whereas low institutional quality in an emerging market can deteriorate financial development.

Suggested Citation

  • Suha Mahmoud Alawi & Wajih Abbassi & Rukhma Saqib & Madeeha Sharif, 2022. "Impact of Financial Innovation and Institutional Quality on Financial Development in Emerging Markets," JRFM, MDPI, vol. 15(3), pages 1-11, March.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:3:p:115-:d:762166
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    References listed on IDEAS

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    Cited by:

    1. Boniface Ngah Epo & Younous Fozoudine Tapche Ndam & Ambiana Mireille Abiala, 2024. "Knowledge Economy and Financial Development in Developing Countries: Evidence from a Panel Autoregressive Distributed-Lag (ARDL) Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 18412-18466, December.
    2. Yu Huan & Md. Qamruzzaman, 2022. "Innovation-Led FDI Sustainability: Clarifying the Nexus between Financial Innovation, Technological Innovation, Environmental Innovation, and FDI in the BRIC Nations," Sustainability, MDPI, vol. 14(23), pages 1-26, November.
    3. Md Qamruzzaman, 2023. "Does financial innovation foster financial inclusion in Arab world? examining the nexus between financial innovation, FDI, remittances, trade openness, and gross capital formation," PLOS ONE, Public Library of Science, vol. 18(6), pages 1-28, June.
    4. Kayode David Kolawole & Biliqees Ayoola Abdulmumin & Gizem Uzuner & Oluwagbenga Abayomi Seyingbo & Lukman Adebayo-Oke Abdulrauf, 2024. "Modelling the nexus between finance, government revenue, institutional quality and sustainable energy supply in West Africa," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 13(1), pages 1-13, December.
    5. Wei Li & Serhat Yüksel & Hasan Dinçer, 2022. "Understanding the financial innovation priorities for renewable energy investors via QFD-based picture fuzzy and rough numbers," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-30, December.

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