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Financial Development, Openness and Institutions: Evidence from Panel Data

  • Badi Baltagi

    (Department of Economics University of Leicester)

  • Panicos Demetriades


    (University of Leicester)

  • Siong Hook Law

    (University Putra Malaysia)

Using dynamic panel data techniques and several data sets, we provide new evidence on the effects of openness and institutions on financial development. Our findings suggest that openness and institutions are potentially very important factors for different aspects of financial development. They do not however provide much support to the simultaneous openness hypothesis of Rajan and Zingales (2003), suggesting that a more nuanced openness or political economy story may be required to explain the variation of financial development across countries and over tim

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Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2006 with number 166.

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Date of creation: 02 Feb 2007
Date of revision:
Handle: RePEc:mmf:mmfc06:166
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  16. Bekaert, Geert & Harvey, Campbell R. & Lundblad, Christian, 2001. "Emerging equity markets and economic development," Journal of Development Economics, Elsevier, vol. 66(2), pages 465-504, December.
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  19. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
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