Economics at your fingertips  

The Institutional Quality Effect on Credits Provided by the Banks

Azmat Gani () and Tareq Rasul
Additional contact information
Azmat Gani: Sultan Qaboos University
Tareq Rasul: Australian Institute of Business

International Advances in Economic Research, 2020, vol. 26, issue 3, No 3, 249-258

Abstract: Abstract Research on developing economies is deficient in analysing institutional quality dimensions that are beyond standard determinants of the provision of credits by banks. This study fills this gap by adopting a broad-based modelling approach in examining the effects of institutional quality on credit provided by banks for a large sample of developing economies. A structural model, including balanced annual panel data from the World Bank World Development Indicators and Worldwide Governance Indicators for the period 2004 to 2017, was estimated using panel-corrected standard errors and two-stage least squares estimation techniques. The core variables determining the credit provided by banks were controlled for in the estimation phase. The findings showed that the rule of law, regulatory quality and the strength of legal systems are significant determinants of credit provided by banks, among other factors. Investments in improving institutional quality can be beneficial for credit diffusion by the banks. This study is distinct from previous empirical studies of the developing economies as it directs attention to institutional quality measures on bank credit expansion in an inclusive modelling framework. It makes a significant positive contribution to the finance institutional nexus literature in terms of understanding the value and role that institutional quality plays in fostering bank credit provision in developing economies.

Keywords: Bank credit; Developing countries; Legal systems; Regulatory quality; G38; O50 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (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:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s11294-020-09794-0

Access Statistics for this article

International Advances in Economic Research is currently edited by Katherine S. Virgo

More articles in International Advances in Economic Research from Springer, International Atlantic Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2020-09-26
Handle: RePEc:kap:iaecre:v:26:y:2020:i:3:d:10.1007_s11294-020-09794-0