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On the substitution of institutions and finance in investment

Author Info

  • Asongu Simplice

    ()

    (Yaoundé/Cameroun)

Abstract

The Ali (2013, EB) findings on the nexuses among institutions, finance and investment could have an important influence on policy and academic debates. This paper relaxes his hypotheses on the conception, definition and measurement of finance and institutions because they are less realistic to developing countries to which the resulting policy implications are destined. We dissect with great acuteness the contextual underpinnings of financial development dynamics and elucidate why the Acemoglu & Johnson (2005) justification provided for the measurement of property rights institutions (PRI) is lacking in substance. Using updated data (1996-2010) from 53 African countries, we provide more robust evidence on the substitution of institutions and finance in investment. Results under many baseline and augmented scenarios are not consistent with the underlying paper. Justifications for the differences in findings are discussed. As a policy implication, the Ali (2013, EB) findings for countries with poor financial systems may not be relevant for Africa.

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File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/On-the-substitution-of-institutions-and-finance-in-investment.pdf
File Function: Revised version, 2013
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Paper provided by African Governance and Development Institute. in its series Working Papers with number 14/005.

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Length: 24
Date of creation: Jan 2014
Date of revision:
Handle: RePEc:agd:wpaper:14/005
Contact details of provider: Web page: http://www.afridev.org/index.php/en/Email:


More information through EDIRC

Keywords: Finance; Institutions; Investment: Property Rights; Africa;

Other versions of this item:

Find related papers by JEL classification:
  • G20 - Financial Economics - - Financial Institutions and Services - - - General
  • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
  • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
  • P14 - Economic Systems - - Capitalist Systems - - - Property Rights
  • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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  7. Asongu Simplice, 2010. "Bank Efficiency and Openness in Africa: Do Income Levels Matter?," Working Papers 10/001, African Governance and Development Institute., revised 18 Dec 2011.
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  11. Asongu, Simplice A & Aminkeng, Gilbert A. A, 2013. "The Economic Consequences of China-Africa Relations: Debunking Myths in the Debate," MPRA Paper 48468, University Library of Munich, Germany.
  12. Simplice A, Asongu, 2012. "Harmonizing IPRs on Software Piracy: Empirics of Trajectories in Africa," MPRA Paper 42466, University Library of Munich, Germany.
  13. Bond, Stephen Roy & Hoeffler, Anke & Temple, Jonathan, 2001. "GMM Estimation of Empirical Growth Models," CEPR Discussion Papers 3048, C.E.P.R. Discussion Papers.
  14. Asongu Simplice & Antonio R. Andrés, 2012. "Fighting software piracy: which governance tools matter in Africa?," Working Papers 12/017, African Governance and Development Institute..
  15. Asongu, Simplice A, 2013. "Inequality, poverty and quality of institutions: which freedom channels of globalization matter for Africa?," MPRA Paper 46929, University Library of Munich, Germany.
  16. Simplice A Asongu, 2013. "How do financial reforms affect inequality through financial sector competition? Evidence from Africa," Economics Bulletin, AccessEcon, vol. 33(1), pages 401-414.
  17. Asongu, Simplice A, 2013. "How do financial reforms affect inequality through financial sector competition? Evidence from Africa," MPRA Paper 44410, University Library of Munich, Germany.
  18. Simplice A, Asongu, 2012. "Financial development dynamic thresholds of financial globalization: evidence from Africa," MPRA Paper 44254, University Library of Munich, Germany.
  19. Asongu Simplice, 2011. "Government Quality Determinants of Stock Market Performance in African Countries," Working Papers 11/019, African Governance and Development Institute..
  20. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  21. Henry Kaiser, 1974. "An index of factorial simplicity," Psychometrika, Springer, vol. 39(1), pages 31-36, March.
  22. Simplice A Asongu, 2013. "A Short-run Schumpeterian Trip to Embryonic African Monetary Zones," Economics Bulletin, AccessEcon, vol. 33(1), pages 859-873.
  23. Simplice A Asongu, 2013. "How has politico-economic liberalization affected financial allocation efficiency? Fresh African evidence," Economics Bulletin, AccessEcon, vol. 33(1), pages 663-676.
  24. Magnus Saxegaard, 2006. "Excess Liquidity and the Effectiveness of Monetary Policy; Evidence From Sub-Saharan Africa," IMF Working Papers 06/115, International Monetary Fund.
  25. Federico Varese, 1997. "The Transition to the Market and Corruption in Post-socialist Russia," Political Studies, Political Studies Association, vol. 45(3), pages 579-596.
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  27. Abdi Ali, 2013. "Are property rights institutions and financial development complements or substitutes? The case of private investment," Economics Bulletin, AccessEcon, vol. 33(2), pages 1126-1131.
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Cited by:

  1. Amavilah Voxi & Asongu Simplice & Andrés Antonio, 2014. "Globalization, Peace & Stability, Governance, and Knowledge Economy," Working Papers 14/012, African Governance and Development Institute..
  2. Simplice Asongu, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," Working Papers 14/033, African Governance and Development Institute..

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