 Institutions and the financeegrowth nexus: Empirical evidence from MENA countriesKaouthar Gazdar and Mondher Cherif Borsa Istanbul Review, 2015, vol. 15, issue 3, 137-160 Abstract: This paper investigates the effect of institutional quality on the finance–growth nexus. To this end, an empirical model with linear interaction between financial development and institutional quality is estimated. Our main findings show that, while most indicators of financial development have a significantly negative effect on economic growth, the sign of the coefficients of interaction variables are significantly positive. This provides strong evidence that institutional quality mitigates the negative effect of financial development on economic growth. Looking to the subcomponents of our institutional index, our findings show a development of the banking sector in a country with an important score in Law and Order, Bureaucracy and Investment Profile facilitate growth. Also, countries, with an important score of investment profile, can benefit from stock market development in terms of economic growth. These results suggest that, in order to benefit from financial development, financial systems in MENA countries must be embedded within a sound institutional framework. Keywords: Banking sector development; Stock market development; Economic growth; Institutional quality; MENA countries (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bor:bistre:v:15:y:2015:i:3:p:137-160 Access Statistics for this article More articles in Borsa Istanbul Review from Research and Business Development Department, Borsa Istanbul Contact information at EDIRC. |
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