Will political liberalisation bring about financial development?

Yongfu Huang

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: This paper studies the e¤ect of political liberalisation on financial development in two steps. First, the paper examines whether political liberalisation in terms of institutional improvement promotes financial development, using a panel dataset of 90 developed and developing countries over 1960-99. The empirical evidence reveals a positive effect on financial development at least in the short-run, particularly for lower-income countries, ethnically divided countries and French legal origin countries. In the second part of the paper, a before-after event study approach is used to explore the impact of democratic transitions on financial development. It indicates that a democratic transformation is typically followed by an increase in financial development.

Keywords: Political liberalisation; Financial development. (search for similar items in EconPapers)
JEL-codes: G20 O16 O17 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2005-11
New Economics Papers: this item is included in nep-dev, nep-fin, nep-pol and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:05/578

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