What Drives Financial Development? A Meta-Regression Analysis
69 Pages Posted: 17 Jun 2020
Date Written: 2020
This paper offers a meta-regression analysis of the literature on the drivers of financial development. Our results based on 1900 estimates suggest that institutional quality is positively correlated to both private sector credit and stock market capitalization (both as share of GDP). Domestic financial openness has a positive effect on both proxies for financial development, while trade openness seems only important for stock market capitalization. Inflation has an adverse effect on financial development, which is larger for stock market capitalization. Finally, we conclude that the literature has not yet robustly established that remittances and trust matter for financial development.
Keywords: financial development, meta-regression analysis, law and finance, institutional quality, trade openness, financial openness, remittances, trust
JEL Classification: G210, N200, O160, O430, P480
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