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The Political Economy of Financial Development


  • Sourafel Girma

    (University of Leicester)

  • Anja Shortland

    (University of Leicester)


Political economy theories of financial development argue that in countries where a narrow elite controls political decisions, financial development may be obstructed to deny access to finance to potential competitors. We use panel data on developed and developing countries from 1975-2000 to examine the effect of a country's democracy characteristics and regime change on financial development. Our results show that regime stability and democracy promote financial development, with additional benefits from fully democratic regimes. Copyright 2008 , Oxford University Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sourafel Girma & Anja Shortland, 2004. "The Political Economy of Financial Development," Money Macro and Finance (MMF) Research Group Conference 2004 39, Money Macro and Finance Research Group.
  • Handle: RePEc:mmf:mmfc04:39

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    References listed on IDEAS

    1. Panicos O. Demetriades & Kul B. Luintel, 1997. "The Direct Costs Of Financial Repression: Evidence From India," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 311-320, May.
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    7. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
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    19. repec:hrv:faseco:30728041 is not listed on IDEAS
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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • K0 - Law and Economics - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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