Openness, Institutions and Financial Development
WEFRP Working Paper No. WEF 0012
29 Pages Posted: 31 Oct 2006
Date Written: May 2006
Abstract
Using dynamic panel data techniques and data from 43 developing countries during 1980-2001, we provide evidence which suggests that openness and institutions are important determinants of financial development. Openness, in terms of trade and capital flows, is particularly potent in promoting financial development in middle-income countries, but much weaker in low-income countries. Our findings are robust to alternative measures of financial and trade openness, as well as estimation method and sample period.
Keywords: capital inflows, trade openess, financial development, dynamic panal data analysis
JEL Classification: F19, G29
Suggested Citation: Suggested Citation
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