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The Effect of Intelligence on Financial Development: A Cross-Country Comparison

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  • Kodila-Tedika, Oasis
  • Asongu, Simplice

Abstract

We assess the correlations between intelligence and financial development in 123 countries using data averages from 2000-2010. Human capital is measured in terms of IQ, cognitive ability & cognitive skills, while financial development is appreciated both from financial intermediary and stock market development perspectives. Short-term financial measures are private and domestic credits whereas long-term financial indicators include: stock market capitalization, stock market value traded and turnover ratio. The following findings are established. (1) With respect to private credit, the positive correlations of IQ and cognitive ability are broadly similar while that of cognitive skills is substantially higher in terms of magnitude. (2) The correlation between intelligence and other financial variables are broadly similar. (3) The underlying findings are broadly confirmed in terms of sign of correlation, though the magnitude of correlation is higher (lower) with the addition of social capital or ethnic fractionalization (institutions or income). (4) When continents are excluded to control for extreme effects, baseline results are confirmed and the following on order of continental importance in financial development is established in increasing magnitude: Africa, Americas, Oceania, Europe & Asia.

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  • Kodila-Tedika, Oasis & Asongu, Simplice, 2015. "The Effect of Intelligence on Financial Development: A Cross-Country Comparison," MPRA Paper 67295, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:67295
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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. Kodila-Tedika, Oasis & Asongu, Simplice, 2018. "The Long-Term Effects of African Resistance to European Domination: Institutional Mechanism," MPRA Paper 85237, University Library of Munich, Germany.
    3. repec:eme:ijsepp:ijse-08-2016-0221 is not listed on IDEAS
    4. Simplice Asongu & Oasis Kodila-Tedika, 2015. "Intelligence and Slave Export Intensity: A Cross-Country Empirical Assessment," Working Papers of the African Governance and Development Institute. 15/029, African Governance and Development Institute..
    5. Burhan, Nik Ahmad Sufian & Che Razak, Razli & Rosli, Muhamad Ridhwan & Selamat, Muhamad Rosli, 2017. "The Bell Curve of Intelligence, Economic Growth and Technological Achievement: How Robust is the Cross-Country Evidence?," MPRA Paper 77469, University Library of Munich, Germany.
    6. Oasis Kodila-Tedika & Simplice Asongu & Matthias Cinyabuguma, 2016. "Financial Development and Geographic Isolation: Global Evidence," Working Papers of the African Governance and Development Institute. 16/014, African Governance and Development Institute..
    7. Simplice Asongu & Ndemaze Asongu, 2018. "The comparative exploration of mobile money services in inclusive development," International Journal of Social Economics, Emerald Group Publishing, vol. 45(1), pages 124-139, January.
    8. Oasis Kodila-Tedika & Simplice A. Asongu, 2016. "Genetic distance and cognitive human capital: a cross-national investigation," Journal of Bioeconomics, Springer, vol. 18(1), pages 33-51, April.
    9. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Comparative human development thresholds for absolute and relative pro-poor mobile banking in developing countries," Working Papers of the African Governance and Development Institute. 17/007, African Governance and Development Institute..
    10. repec:taf:intecj:v:32:y:2018:i:2:p:291-306 is not listed on IDEAS
    11. Kodila-Tedika, Oasis & Asongu, Simplice & Azia-Dimbu, Florentin, 2015. "Statistics and IQ in Developing Countries: A Note," MPRA Paper 68323, University Library of Munich, Germany.
    12. Salahodjaev, Raufhon, 2016. "Intelligence and deforestation: International data," Forest Policy and Economics, Elsevier, vol. 63(C), pages 20-27.
    13. Simplice A. Asongu & Oasis Kodila-Tedika, 2018. "“This One Is 400 Libyan Dinars, This One Is 500”: Insights from Cognitive Human Capital and Slave Trade," International Economic Journal, Taylor & Francis Journals, vol. 32(2), pages 291-306, April.
    14. Oasis Kodila-Tedika & Simplice Asongu & Florentin Azia-Dimbu, 2016. "The Sensitive Nature of Social Trust to Intelligence," Working Papers of the African Governance and Development Institute. 16/005, African Governance and Development Institute..
    15. Simplice Asongu & Oasis Kodila-Tedika, 2015. "Tribalism and Financial Development," Working Papers of the African Governance and Development Institute. 15/018, African Governance and Development Institute..
    16. Oasis Kodila-Tedika & Simplice Asongu, 2015. "Intelligence, Human Capital and HIV/AIDS: Fresh Exploration," Working Papers of the African Governance and Development Institute. 15/027, African Governance and Development Institute..
    17. repec:eee:soceco:v:69:y:2017:i:c:p:83-91 is not listed on IDEAS
    18. Solieva, Mastura, 2017. "Cognitive abilities and sustainable development: a global analysis," MPRA Paper 77055, University Library of Munich, Germany.

    More about this item

    Keywords

    Financial development; Intelligence; Skill; Human Capital;

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General
    • I29 - Health, Education, and Welfare - - Education - - - Other

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