IDEAS home Printed from https://ideas.repec.org/a/sae/globus/v23y2022i4p971-983.html
   My bibliography  Save this article

Institutional Quality and Financial Development: Evidence from Developing and Emerging Economies

Author

Listed:
  • Hayat Khan
  • Sher Khan
  • Fan Zuojun

Abstract

Using a panel data set of 189 countries by employing dynamic models OLS, fixed effect, random effect and generalized method of moments (GMM) estimators. The study revisits the relationship between institutional quality and financial development in developing and emerging countries. This study is ever the first comprehensive and wide-ranging that categorizes the countries into developing and emerging countries using multiple dynamic approaches. Experimental findings of the study are based on GMM, which indicates that better institutions are important for financial development, specifically political stability, control of corruption and regulatory quality positively affect financial development in the global panel of the study. Rule of law negatively affects financial development, which reveals that in most of the global countries, the rule of law is very feeble. Control of corruption index is positively effecting financial development in emerging and global panel which indicates that most of the countries have reduced corruption to low level. The current study also found that emerging countries have reduced corruption, but other institutional indicators are found to be insignificant. The overall result concludes that good quality institutions are the main drivers of financial development and it stimulates financial development. The present study suggests that developing and emerging countries should focus to improve the institutional quality by re-examining the rules of law, government effectiveness and voice accountability institutional factors to make it better.

Suggested Citation

  • Hayat Khan & Sher Khan & Fan Zuojun, 2022. "Institutional Quality and Financial Development: Evidence from Developing and Emerging Economies," Global Business Review, International Management Institute, vol. 23(4), pages 971-983, August.
    • Handle: RePEc:sae:globus:v:23:y:2022:i:4:p:971-983
    DOI: 10.1177/0972150919892366
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0972150919892366
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0972150919892366?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arfia Aman & Muhammad Asif Khan & Mohammed Arshad Khan & Ahsanuddin Haider & Judit Oláh & Veronika Fenyves, 2023. "Role of institutions in promoting finance in emerging markets: A panel data analysis," PLOS ONE, Public Library of Science, vol. 18(3), pages 1-26, March.
    2. Shreya Pal & Mantu Kumar Mahalik, 2024. "Determinants of Financial Development in Top and Bottom Remittances and FDI Inflows Recipient Developing Regions—How Does Institutional Quality Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 17108-17139, December.
    3. Rudra P. Pradhan & Mahendhiran S. Nair & Mak B. Arvin & John H. Hall, 2023. "Institutional quality, financial development and sustainable economic growth among lower income countries," Natural Resources Forum, Blackwell Publishing, vol. 47(3), pages 435-483, August.
    4. Muhammad Khalid Anser & Muhammad Asif Khan & Mohammed Arshad Khan & Wang Huizhen & Ahsanuddin Haider, 2024. "The effectiveness of emerging markets’ legal structure in explaining financial development," PLOS ONE, Public Library of Science, vol. 19(4), pages 1-19, April.
    5. Clement Olalekan Olaniyi & Mamdouh Abdulaziz Saleh Al‐Faryan & Eyitayo Oyewunmi Ogbaro, 2025. "Do institutional quality and its threshold matter in the sensitivity of the renewable energy transition to financial development? New empirical perspectives," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 5-43, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:globus:v:23:y:2022:i:4:p:971-983. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.imi.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.