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The Contribution Of Financial Development To Formalization Through Economic Growth: Evidence From Cross-Country Data

Author

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  • AEGGARCHAT SIRISANKANAN

    (Faculty of Accountancy and Management, Mahasarakham University, Khamriang Sub-District, Khatarawichai District, Mahasarakham 44150, Thailand)

  • PAPAR KANANURAK

    (Business Economics, Martin De Tours School of Management and Economics, Assumption University, Suvarnabhumi Campus, Samuthprakarn 10540, Thailand)

Abstract

The aim of the paper is to formulate empirical specification models to examine whether financial development stimulates economic growth and encourages formalization. Cross-country data analysis of 140 sample countries during the period from 2000 to 2018 were utilized, together with new indexes of financial development. The income decomposition method and the two-step estimation approach, together with the multiple linear regression with interactions effect, were employed as empirical methods. It was found that financial development can lower informal self-employment through economic growth. Financial development also contributes to economic growth. Therefore, development of financial markets and financial institutions should be an alternative policy to control informal employment.

Suggested Citation

  • Aeggarchat Sirisankanan & Papar Kananurak, 2022. "The Contribution Of Financial Development To Formalization Through Economic Growth: Evidence From Cross-Country Data," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 27(03), pages 1-28, September.
    • Handle: RePEc:wsi:jdexxx:v:27:y:2022:i:03:n:s1084946722500212
    DOI: 10.1142/S1084946722500212
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