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On the substitution of institutions and finance in investment

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  • 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.

Suggested Citation

  • Asongu Simplice, 2014. "On the substitution of institutions and finance in investment," Working Papers 14/005, African Governance and Development Institute..
    • Handle: RePEc:agd:wpaper:14/005
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    File Function: Revised version, 2013
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    References listed on IDEAS

    as
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    7. 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.
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    Cited by:

    1. Amavilah, Voxi & Asongu, Simplice A & Andrés, Antonio R, 2014. "Globalization, Peace & Stability, Governance, and Knowledge Economy," MPRA Paper 58756, University Library of Munich, Germany.
    2. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    3. Simplice Asongu & Enowbi Batuo & Vanessa Tchamyou, 2015. "Bundling Governance: Finance versus Institutions in Private Investment Promotion," Working Papers 15/051, African Governance and Development Institute..
    4. Asongu, Simplice A. & Kodila-Tedika, Oasis, 2015. "On the Empirics of Institutions and Quality of Growth: Evidence for Developing Countries," MPRA Paper 70233, University Library of Munich, Germany.
    5. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "Quality of Growth Empirics: Comparative gaps, benchmarking and policy syndromes," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 861-882.
    6. Amavilah, Voxi & Asongu, Simplice A. & Andrés, Antonio R., 2017. "Effects of globalization on peace and stability: Implications for governance and the knowledge economy of African countries," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 91-103.
    7. Asongu, Simplice, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," MPRA Paper 65300, University Library of Munich, Germany.
    8. Simplice Asongu & Paul Acha-Anyi, 2017. "The Murder Epidemic: A Global Comparative Study," Working Papers 17/059, African Governance and Development Institute..
    9. Simplice A Asongu, 2015. "A Good Turn Deserves Another: Political Stability, Corruption and Corruption-Control," Economics Bulletin, AccessEcon, vol. 35(4), pages 2037-2048.
    10. Asongu, Simplice & Kodila-Tedika, Oasis, 2016. "Determinants of Property Rights Protection in Sub-Saharan Africa," MPRA Paper 76587, University Library of Munich, Germany, revised Nov 2016.

    More about this item

    Keywords

    Finance; Institutions; Investment: Property Rights; Africa;

    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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