Financial development and public debt. Estimating the role of institutional quality

Qamar Abbas, Muhammad Ramzan and Sumbal Fatima
Additional contact information
Qamar Abbas: Nankai University, China
Muhammad Ramzan: Jiangsu University, China
Sumbal Fatima: Nankai University, China

Theoretical and Applied Economics, 2022, vol. XXIX, issue 3(632), Autumn, 5-26

Abstract: Maintaining a sustainable debt level has emerged as a critical issue, particularly when public debt exceeds a certain threshold level. This paper examines the impact of public debt on financial development as mediated by institutional quality. For this purpose, we use FE (LSDV) and system GMM estimators. Our empirical findings demonstrate that public debt has negative impact on financial development, but this negative impact turns positive when it interacts with institutional quality. This implies that public debt is a function of institutional quality, and policymakers must maintain the threshold level of institutional quality in order to make better use of the debt.

Keywords: financial development; public debt; institutional quality; FE (LSDV); system GMM. (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://store.ectap.ro/articole/1605.pdf (application/pdf)
http://www.ectap.ro/articol.php?id=1605&rid=148 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agr:journl:v:3(632):y:2022:i:3(632):p:5-26

Access Statistics for this article

Theoretical and Applied Economics is currently edited by Mircea Dinu

More articles in Theoretical and Applied Economics from Asociatia Generala a Economistilor din Romania / Editura Economica Contact information at EDIRC.
Bibliographic data for series maintained by Mircea Dinu ().