The Role of Institutional Quality in Finance-Growth Nexus: Evidence from North African Countries

Imen Mohamed Sghaier ()
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Imen Mohamed Sghaier: University of Sfax

Journal of the Knowledge Economy, 2022, vol. 13, issue 4, No 36, 3472-3491

Abstract: Abstract This study aims to determine the relationship between financial development and economic growth with respect to the state of institutional quality in 4 North African countries over the 2000–2018 period. Using the dynamic generalized method of moments in a panel data analysis, we found that financial development has a positive effect on economic growth. Equally important, institutional quality plays a significant and positive role in economic growth. More interestingly, the study finds that institutional development is complementary to financial development. As a policy implication, we recommend that policymakers place special importance on implementing policies that result in the deepening of financial systems, including a sound institutional framework. Thus, by promoting the development of a country’s financial system, economic growth will be accelerated.

Keywords: Financial development; Institutions; Economic growth; Panel data analysis (search for similar items in EconPapers)
JEL-codes: F23 F34 F43 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s13132-021-00850-6

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