Institutional and macroeconomic determinants of financial development in the OIC countries

Abdulsalam Abubakar and Salina Kassim ()

Global Business and Economics Review, 2018, vol. 20, issue 4, 410-424

Abstract: The role of financial development to the growth process is recognised in the literature and policy cycles, therefore, what determines it is also worthy of attention. This study investigates the institutional and macroeconomic determinants of financial development in 50 OIC member countries from 2003 to 2011. Dynamic panel approach-system-GMM is employed. The results revealed that overall level of income positively influences financial development, and exchange rate encourages financial depth and lending activities. Financial openness is found to promote financial depth only, while institutional quality promotes lending activities. On the other hand, inflation stimulates bank private credit and reduces the depth of the financial sector. This mixed results implied that, policy makers in the OIC countries, shall adopt a hybrid of economic and financial policies as well as implement political, legal and governance reforms in order to enhance financial development and hence promote economic growth.

Keywords: determinants; financial development; institutions; Organisation of Islamic Conference; OIC; system-GMM. (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.inderscience.com/link.php?id=92754 (text/html)
Access to full text is restricted to subscribers.

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:ids:gbusec:v:20:y:2018:i:4:p:410-424

Access Statistics for this article

More articles in Global Business and Economics Review from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().