Economic Growth, Institutional Quality and Financial Development in Middle-Income Countries

Recuero, Laura Heras; González, Roberto Pascual

doi:10.2139/ssrn.3489866

Cited by 7 publications

(5 citation statements)

References 35 publications

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“…This could have been caused by prevailing poor bureaucratic quality, quality of law and order and governance in these nations, which also affects the selection, monitoring and replacement process of the government and the government capacity to effectively implement policies post formulation. This result however contradicts Heras Recuero and Pascual González (2019) who concluded a positive effect of institutional quality on economic growth in middle income countries. Moreover, we introduced an interaction term between digital financial inclusion (DFII) and institutional quality ( INSTITUTIONS ) to test whether the impact of digital financial inclusion goes through institutional quality.…”

Section: Methodscontrasting

confidence: 72%

Digital financial inclusion and economic growth in Sub-Saharan Africa: the role of institutions and governance

Chinoda

Kapingura

2023

AJEMS

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PurposeThis study examines the role of institutions and governance on the digital financial inclusion and economic growth nexus in Sub-Saharan Africa (SSA) from 2014 to 2020.Design/methodology/approachThis study adopts the generalised method of moments technique which controls for endogeneity. The authors employed four main variables namely, index of digital financial inclusion, gross domestic product per capita growth, institutions and governance.FindingsThe results suggest a significant positive effect of institutional quality and governance on the digital financial inclusion-economic growth nexus in SSA. Furthermore, the authors find that effect of trade and population growth on economic growth was significantly positive while inflation reduces economic growth in the region.Research limitations/implicationsThis study also ignored the effect of digital financial inclusion on environmental quality. Future researches should focus on addressing these drawbacks and replicating the study in Africa as a whole and other developing countries across the world that are experiencing digital financial inclusion and economic growth challenges. The results from the study imply that a positive relationship between digital financial inclusion and economic growth. It is important to note that the study was carried out on the premise that institutions play a pivotal role in enhancing economic growth in SSA.Practical implicationsThe results confirm the significance of policies that enhances institutional quality and governance which are other avenues the authorities can pursue to enhance economic growth in SSA.Social implicationsThe paper documents the importance of institutions in boosting economic growth which impacts on social life rather than digital financial inclusion only.Originality/valueThe paper makes a contribution through analysing the role of institutions and governance on the digital financial inclusion-economic growth nexus rather than the traditional financial inclusion–economic growth nexus which is common to the majority of the available empirical studies.

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Section: Methodscontrasting

confidence: 72%

Digital financial inclusion and economic growth in Sub-Saharan Africa: the role of institutions and governance

Chinoda

Kapingura

2023

AJEMS

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“…For 29 emerging economies, (Nguyen et al, 2018) proved that institutional quality impacted positively on economic growth. This finds support in Recuero & González, (2019) for middle-income countries. In Nigeria, Olanrewaju et al, (2019) showed that all the institutional quality variables employed in the study Granger-caused growth without a feedback.…”

Section: Empirical Literaturementioning

confidence: 66%

Economic Performance in the Arab Maghreb Union (AMU): A Focus on the Contributions of Economic Openness and Institutional Quality

Chile Nzeh,

Uzoechina,

Okoli

et al. 2023

IJEBE

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Empirical results have shown that economic openness and institutional quality variables influence the performance of the economy of different countries and regions differently. While these variables improve the economy of some countries and regions, findings have shown that in others the reverse is the case. In this present study, emphasis is on the contributions of economic openness and institutional quality to the economic performance of the Arab Maghreb Union (AMU). The study utilized the panel autoregressive distributed lag (ARDL) model with annual series ranging from 2000 to 2020. Institutional quality variables were selected using the principal component analysis (PCA). The short run results showed that, while capital account openness impacted positively on GDP per capita, trade openness adversely affected GDP per capita. In the long run, results indicated that FDI inflows had a positive and significant impact on GDP per capita. In the long run also, while governance effectiveness had negative and significant impact on GDP per capita, the impact of political stability was positive and significant. Consequently, the study recommends that in the short run, economic liberalization policy in the bloc should focus more on capital account openness than trade openness, while the long run policy thrust should centre on how to attract and harness FDI inflows into the member countries. This requires improvement in governance through building strong and virile institutions.

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“…Furthermore, the endogenous growth theory implicitly highlighted the influence of institutional quality (IQ) on growth (Recuero & Gonzalez, 2019). Thus, incorporating "IQ" into equation (3.14):…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…From the theoretical framework and (9) above, the empirical models for this study is derived from the endogenous growth approach, which throws light on the impact of endogenous variables like domestic credit to the public and private sectors on economic growth in an economy. Thus, the model for this study, adapted from Pagano (1993) and Recuero and Gonzalez (2019) is specified as…”

Section: Model Specificationmentioning

confidence: 99%

The Relative Impact of Domestic Credit to the Private and Public Sectors on Economic Growth in Nigeria

2023

NIU JSS

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Despite the adoption of multiple policy measures aimed at promoting credit growth, the Nigerian economy has failed to experience remarkable progress. The financial sector continues to face challenges such as insufficient long-term funding, liquidity mismatch, inefficiencies in fund allocation, inadequate domestic credit to investors, among others that hinder its growth. To address this gap, this study aims to investigate the relative contributions of domestic credit to the private and public sectors to economic growth in Nigeria from 1981 -2020. The study employs descriptive and inferential statistical techniques, including stationary tests, lag selection criteria, and an Autoregressive Distributed Lag bound model to capture the short-and long-run relationships among the variables. The findings indicate that credit to the private sector contributes significantly to economic growth, while credit to the public sector has an insignificant impact. The study recommends that the government must avoid a one-size-fit-for-all policy in promoting domestic credit in Nigeria. Rather, domestic credit policy should be sector specific. There is a need for increased synergy of public and private sector collaboration as well. Effective risk management practices should be introduced to monitor credits, especially those to the public sector, to improve the impact of domestic credit on economic growth.

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Economic Growth, Institutional Quality and Financial Development in Middle-Income Countries

Cited by 7 publications

References 35 publications

Digital financial inclusion and economic growth in Sub-Saharan Africa: the role of institutions and governance

Digital financial inclusion and economic growth in Sub-Saharan Africa: the role of institutions and governance

Economic Performance in the Arab Maghreb Union (AMU): A Focus on the Contributions of Economic Openness and Institutional Quality

The Relative Impact of Domestic Credit to the Private and Public Sectors on Economic Growth in Nigeria

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