Financial Development, Openness and Institutions: Evidence from Panel Data

Baltagi, Badi H.; Demetriades, Panicos; Law, Siong-Hook

doi:10.2139/ssrn.1026323

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Financial Development, Openness and Institutions: Evidence from Panel Data

WEF Working Paper No. 0022

35 Pages Posted: 31 Oct 2007

See all articles by Badi H. Baltagi

Badi H. Baltagi

Syracuse University; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics; Syracuse University - Maxwell School of Citizenship and Public Affairs

Panicos Demetriades

University of Leicester - Department of Economics

Siong-Hook Law

University Putra Malaysia - Department of Economics

Date Written: May 2007

Abstract

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.

Keywords: financial development, trade openness, financial openness, economic institutions, financial liberalization, dynamic panel data analysis

JEL Classification: F19, G29

Suggested Citation: Suggested Citation

Baltagi, Badi H. and Demetriades, Panicos O. and Law, Siong-Hook, Financial Development, Openness and Institutions: Evidence from Panel Data (May 2007). WEF Working Paper No. 0022, Available at SSRN: https://ssrn.com/abstract=1026323 or http://dx.doi.org/10.2139/ssrn.1026323