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Finance and Growth Nexus: What Role for Institutions in Developed and Developing Countries?

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  • Helmi Hamdi, Abdelaziz Hakimi, and Rashid Sbia

    (Aix-Marseille University CERGAM (4225), Faculty of Law, Economics and Management of Jendouba, and Ministry of Finance)

Abstract

The main purpose of this paper is to investigate the relationship between financial sector development and economic growth taking into consideration the role of institutions quality. Our sample is on a group of 143 countries observed during the period of 2006-2013. The sample is dived into 100 developing and 43 developed countries. Using structural GMM the paper shows that financial sector plays a crucial role in economic development and growth for the whole sample as well as for developed and developing countries. However, the results show that unlike developing countries, developed countries enjoyed the presence of proper institutions in their countries which in turn have contributed further to the development of their financial sector.

Suggested Citation

  • Helmi Hamdi, Abdelaziz Hakimi, and Rashid Sbia, 2017. "Finance and Growth Nexus: What Role for Institutions in Developed and Developing Countries?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(4), pages 1-22, December.
    • Handle: RePEc:jed:journl:v:42:y:2017:i:4:p:1-22
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    Cited by:

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    2. Clement Olalekan Olaniyi, 2022. "On the transmission mechanisms in the finance–growth nexus in Southern African countries: Does institution matter?," Economic Change and Restructuring, Springer, vol. 55(1), pages 153-191, February.
    3. Helmi Hamdi & Abdelaziz Hakimi, 2023. "Corruption, imported innovation, and growth: Evidence using the panel smooth transition regression approach for developing countries," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(5), pages 956-972, June.
    4. Abdelaziz Hakimi & Rim Boussaada & Majdi Karmani, 2022. "Is the relationship between corruption, government stability and non‐performing loans non‐linear? A threshold analysis for the MENA region," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4383-4398, October.

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    More about this item

    Keywords

    Finance; growth; institutions; developed and developing countries;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G0 - Financial Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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