The Political Economy of Financial Development

Posted: 2 Oct 2008

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Anja Shortland

University of Leicester - Department of Economics

Date Written: October 2008

Abstract

Political economy theories of financial development argue that in countries where a narrow elite controls political decisions, financial development may be obstructed to deny access to finance to potential competitors. We use panel data on developed and developing countries from 1975–2000 to examine the effect of a country's democracy characteristics and regime change on financial development. Our results show that regime stability and democracy promote financial development, with additional benefits from fully democratic regimes.

JEL Classification: G18, K0, O16, P16

Suggested Citation

Girma, Sourafel and Shortland, Anja, The Political Economy of Financial Development (October 2008). Oxford Economic Papers, Vol. 60, Issue 4, pp. 567-596, 2008. Available at SSRN: https://ssrn.com/abstract=1276660 or http://dx.doi.org/gpm040

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Anja Shortland

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

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