Institutional quality thresholds and the finance – growth nexus
Using an innovative threshold estimation technique, this study examines whether the growth effect of financial development in countries with distinct levels of institutional development differs. The results demonstrate that there is a threshold effect in the finance-growth relationship. Specifically...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2013
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| Online Access: | http://psasir.upm.edu.my/id/eprint/28303/7/Institutional%20quality%20thresholds%20and%20the%20finance.pdf |
| _version_ | 1796971303073218560 |
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| author | Law, Siong Hook Wan Ngah, Wan Azman Saini Ibrahim, Mansor H. |
| author_facet | Law, Siong Hook Wan Ngah, Wan Azman Saini Ibrahim, Mansor H. |
| author_sort | Law, Siong Hook |
| collection | UPM |
| description | Using an innovative threshold estimation technique, this study examines whether the growth effect of financial development in countries with distinct levels of institutional development differs. The results demonstrate that there is a threshold effect in the finance-growth relationship. Specifically, we found that the impact of finance on growth is positive and significant only after a certain threshold level of institutional development has been attained. Until then, the effect of finance on growth is nonexistent. This finding suggests that the financial development-growth nexus is contingent on the level of institutional quality, thus supporting the idea that better finance (i.e., financial markets embedded within a sound institutional framework) is potent in delivering long-run economic development. |
| first_indexed | 2024-03-06T08:10:58Z |
| format | Article |
| id | upm.eprints-28303 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T08:10:58Z |
| publishDate | 2013 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | upm.eprints-283032015-10-01T03:44:42Z http://psasir.upm.edu.my/id/eprint/28303/ Institutional quality thresholds and the finance – growth nexus Law, Siong Hook Wan Ngah, Wan Azman Saini Ibrahim, Mansor H. Using an innovative threshold estimation technique, this study examines whether the growth effect of financial development in countries with distinct levels of institutional development differs. The results demonstrate that there is a threshold effect in the finance-growth relationship. Specifically, we found that the impact of finance on growth is positive and significant only after a certain threshold level of institutional development has been attained. Until then, the effect of finance on growth is nonexistent. This finding suggests that the financial development-growth nexus is contingent on the level of institutional quality, thus supporting the idea that better finance (i.e., financial markets embedded within a sound institutional framework) is potent in delivering long-run economic development. Elsevier 2013-12 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/28303/7/Institutional%20quality%20thresholds%20and%20the%20finance.pdf Law, Siong Hook and Wan Ngah, Wan Azman Saini and Ibrahim, Mansor H. (2013) Institutional quality thresholds and the finance – growth nexus. Journal of Banking & Finance, 37 (12). pp. 5373-5381. ISSN 0378-4266 10.1016/j.jbankfin.2013.03.011 |
| spellingShingle | Law, Siong Hook Wan Ngah, Wan Azman Saini Ibrahim, Mansor H. Institutional quality thresholds and the finance – growth nexus |
| title | Institutional quality thresholds and the finance – growth nexus |
| title_full | Institutional quality thresholds and the finance – growth nexus |
| title_fullStr | Institutional quality thresholds and the finance – growth nexus |
| title_full_unstemmed | Institutional quality thresholds and the finance – growth nexus |
| title_short | Institutional quality thresholds and the finance – growth nexus |
| title_sort | institutional quality thresholds and the finance growth nexus |
| url | http://psasir.upm.edu.my/id/eprint/28303/7/Institutional%20quality%20thresholds%20and%20the%20finance.pdf |
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