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Will political liberalisation bring about financial development?

  • Yongfu Huang

    ()

This paper studies the e¤ect of political liberalisation on financial development in two steps. First, the paper examines whether political liberalisation in terms of institutional improvement promotes financial development, using a panel dataset of 90 developed and developing countries over 1960-99. The empirical evidence reveals a positive effect on financial development at least in the short-run, particularly for lower-income countries, ethnically divided countries and French legal origin countries. In the second part of the paper, a before-after event study approach is used to explore the impact of democratic transitions on financial development. It indicates that a democratic transformation is typically followed by an increase in financial development.

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File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp05578.pdf
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Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 05/578.

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Length: 35 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:bri:uobdis:05/578
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