Finance, institutions and economic development
Using data from 72 countries for the period 1978-2000, we find that financial development has larger effects on GDP per capita when the financial system is embedded within a sound institutional framework. Moreover, we find that financial development is most potent in middle-income countries, where i...
| Main Authors: | , |
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| Format: | Article |
| Language: | English English |
| Published: |
John Wiley & Sons, Ltd
2006
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/18296/1/Finance.pdf |
| Summary: | Using data from 72 countries for the period 1978-2000, we find that financial development has larger effects on GDP per capita when the financial system is embedded within a sound institutional framework. Moreover, we find that financial development is most potent in middle-income countries, where its effects are particularly large when institutional quality is high. Importantly, we also find that in low-income countries the influence of financial development is at its weakest; in these countries, more finance without sound institutions may not succeed in delivering long-run economic benefits. Copyright © 2006 John Wiley & Sons, Ltd. |
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