What Drives Financial Development? A Meta-Regression Analysis

69 Pages Posted: 17 Jun 2020

See all articles by Hristos Doucouliagos

Hristos Doucouliagos

Deakin University - School of Accounting, Economics and Finance

Jakob de Haan

University of Groningen - Faculty of Economics and Business; De Nederlandsche Bank; CESifo (Center for Economic Studies and Ifo Institute)

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 2020

Abstract

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

Suggested Citation

Doucouliagos, Chris (Hristos) and de Haan, Jakob and Sturm, Jan-Egbert, What Drives Financial Development? A Meta-Regression Analysis (2020). CESifo Working Paper No. 8356, Available at SSRN: https://ssrn.com/abstract=3628943

Chris (Hristos) Doucouliagos (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

Burwood, Victoria 3215
Australia

Jakob De Haan

University of Groningen - Faculty of Economics and Business ( email )

PO Box 800
Groningen, 9700 AV
Netherlands
+31 0 50 3633706 (Fax)

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Jan-Egbert Sturm

KOF Swiss Economic Institute, ETH Zurich ( email )

Zurich
Switzerland

HOME PAGE: http://www.kof.ethz.ch

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, 81679
Germany

HOME PAGE: http://www.cesifo.de

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