Re-examining the finance–institutions–growth nexus: does financial integration matter?

Hazwan Haini, Lutfi Abdul Razak, Pang Wei Loon and Sufrizul Husseini
Additional contact information
Pang Wei Loon: Universiti Brunei Darussalam
Sufrizul Husseini: Universiti Brunei Darussalam

Economic Change and Restructuring, 2023, vol. 56, issue 3, No 18, 1895-1924

Abstract: Abstract This study examines whether financial integration affects the finance–institutions–growth nexus using a sample of 145 countries from 1995 to 2021. Financial globalization continues to be a dominant phenomenon, despite the concerns on contagion and capital flight issues. We argue that financial integration can potentially crowd out the positive growth effects from both financial development and institutions. Using a dynamic panel estimator to control for endogeneity and simultaneity and multidimensional measures of financial development, institutional quality, and financial integration, we find a nonlinear relationship. More specifically, financial integration is growth-enhancing up to a threshold. Additionally, we find the marginal effects of finance and institutions to be insignificant above this threshold.

Keywords: Economic growth; Financial development; Financial openness; Financial globalization; Threshold (search for similar items in EconPapers)
JEL-codes: C33 E44 F65 O47 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10644-023-09498-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:kap:ecopln:v:56:y:2023:i:3:d:10.1007_s10644-023-09498-5

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1007/s10644-023-09498-5

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().