Do economic freedom matters for finance in developing economies: a panel threshold analysis

Muhammad Asif Khan, Mollah Aminul Islam and Usman Akbar

Applied Economics Letters, 2021, vol. 28, issue 10, 840-843

Abstract: Economic freedom is an important determinant of economic development, yet little academic research has considered its financial perspectives. Using a relatively new measure of finance, we find that a high-freedom environment fosters finance in developing economies. Unlike prior literature, the advanced panel threshold estimator shows a single significant economic freedom threshold level of 4.282 as a benchmark, where the relationship turns positive. The findings are robust to alternative estimators and split-sample analysis. The findings are useful for policymakers to attain optimal financial benefits by assuring a high-freedom environment.

Date: 2021
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DOI: 10.1080/13504851.2020.1782335

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