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Financial Development, Openness and Institutions: Evidence from Panel Data

  • Badi H. Baltagi

    (Syracuse University and University of Leicester)

  • Panicos O. Demetriades

    (University of Leicester)

  • Siong Hook Law

    (University Putra Malaysia)

Utilising four annual panel datasets and dynamic panel data estimation procedures we find that trade and financial openness, as well as economic institutions are statistically important determinants of the variation in financial development across countries and over time since the 1980s. However, we find mixed support for the hypothesis that the simultaneous opening of both trade and capital accounts is necessary to promote financial development in a contemporary setting.

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Paper provided by ESRC World Economy and Finance Research Programme, Birkbeck, University of London in its series WEF Working Papers with number 0022.

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Date of creation: May 2007
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Handle: RePEc:wef:wpaper:0022
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