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Are modern financial systems shaped by state antiquity?

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  • James B. Ang

Abstract

We demonstrate that existing differences in financial development between countries can be explained by the cumulative variations in their levels of state experience since 1 AD. This dimension of early historical development has not been considered so far in studies that analyze the determinants of financial development. The estimation allows for all major theories established in the literature as possible explanations for the disparity of financial development across the globe. Significance of state antiquity is robust to the use of alternative indicators of financial development, the consideration of different lengths and periods of statehood, and controlling for a range of variables or country characteristics. Our results highlight the important role of statehood in propelling financial system development, and thus provide some support to the view that historically determined differences in the early-start developmental advantage provide the basis for explaining the fundamental sources of variations in financial development between countries today.

Suggested Citation

  • James B. Ang, 2013. "Are modern financial systems shaped by state antiquity?," Monash Economics Working Papers 38-13, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2013-38
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    Cited by:

    1. Kodila-Tedika, Oasis & Asongu, Simplice A. & Cinyabuguma, Matthias & Tchamyou, Vanessa S., 2017. "Financial development and prehistoric geographical isolation: global evidence," Financial History Review, Cambridge University Press, vol. 24(03), pages 283-306, December.
    2. Hasan, Iftekhar & Horvath, Roman & Mares, Jan, 2015. "What type of finance matters for growth? Bayesian model averaging evidence," Research Discussion Papers 17/2015, Bank of Finland.
    3. Ang, James B., 2013. "Institutions and the long-run impact of early development," Journal of Development Economics, Elsevier, vol. 105(C), pages 1-18.
    4. repec:eee:empfin:v:44:y:2017:i:c:p:108-124 is not listed on IDEAS
    5. Simplice Asongu & Oasis Kodila-Tedika, 2015. "Tribalism and Financial Development," Working Papers 15/018, African Governance and Development Institute..
    6. Oana Borcan & Ola Olsson & Louis Putterman, 2014. "State History and Economic Development: Evidence from Six Millennia," Working Papers 2014-8, Brown University, Department of Economics.
    7. Ang, James B. & Kumar, Sanjesh, 2014. "Financial development and barriers to the cross-border diffusion of financial innovation," Journal of Banking & Finance, Elsevier, vol. 39(C), pages 43-56.
    8. Bleaney, Michael & Dimico, Arcangelo, 2016. "State history, historical legitimacy and modern ethnic diversity," European Journal of Political Economy, Elsevier, vol. 43(C), pages 159-170.
    9. Dombi, Akos & Grigoriadis, Theocharis, 2017. "Ancestry, Diversity & Finance: Evidence from Transition Economies," Discussion Papers 2017/4, Free University Berlin, School of Business & Economics.
    10. Oasis Kodila-Tedika & Simplice Asongu & Matthias Cinyabuguma, 2016. "Financial Development and Geographic Isolation: Global Evidence," Working Papers 16/014, African Governance and Development Institute..
    11. repec:bla:ecinqu:v:55:y:2017:i:3:p:1511-1537 is not listed on IDEAS
    12. James B. Ang & Per G. Fredriksson, 2017. "Statehood Experience, Legal Traditions, And Climate Change Policies," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1511-1537, July.

    More about this item

    Keywords

    State antiquity; Financial development;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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