Impact of Financial Innovation and Institutional Quality on Financial Development in Emerging Markets

Suha Mahmoud Alawi, Wajih Abbassi, Rukhma Saqib and Madeeha Sharif
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Suha Mahmoud Alawi: Finance Department, Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21422, Saudi Arabia
Wajih Abbassi: College of Business and Economics, Qassim University, Buraydah 52571, Saudi Arabia
Rukhma Saqib: Bahria Business School, Bahria University, Islamabad 44000, Pakistan
Madeeha Sharif: Bahria Business School, Bahria University, Islamabad 44000, Pakistan

JRFM, 2022, vol. 15, issue 3, 1-11

Abstract: Financial innovation and institutional quality play a key role in financial development. This study investigates the impact of financial innovation and institutional quality on financial development in an emerging markets setting. We used the sample of 17 emerging markets based on the availability of data from the period 1990–2020. Data were extracted from the World Development Indicator database. In this study, panel unit root, fully modified ordinary least squares and Pedroni Integration tests were applied to analyze the data. We find that financial innovation and institutional quality are significantly and positively related to financial development. Better financial innovation increases financial development, whereas low institutional quality in an emerging market can deteriorate financial development.

Keywords: financial development; institutional quality; financial innovation; emerging markets (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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