Openness, Institutions and Financial Development

Law, Siong-Hook; Demetriades, Panicos

doi:10.2139/ssrn.941387

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Openness, Institutions and Financial Development

WEFRP Working Paper No. WEF 0012

29 Pages Posted: 31 Oct 2006

See all articles by Siong-Hook Law

Siong-Hook Law

University Putra Malaysia - Department of Economics

Panicos Demetriades

University of Leicester - Department of Economics

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

Law, Siong-Hook and Demetriades, Panicos O., Openness, Institutions and Financial Development (May 2006). WEFRP Working Paper No. WEF 0012, Available at SSRN: https://ssrn.com/abstract=941387 or http://dx.doi.org/10.2139/ssrn.941387