The Determinants of Financial Development in the Republic of Yemen: Evidence from the Principal Components Approach

Ramez Badeeb and Hooi Hooi Lean ()

Capital Markets Review, 2017, vol. 25, issue 2, 32-48

Abstract: This paper provides new evidence that sheds light on the main determinants of financial development in the Republic of Yemen. The result demonstrates that economic growth, natural resource dependence, trade openness and inflation are the main determinants of financial development in Yemen. While economic growth and trade openness have a positive impact on the pace of financial development, the natural resource dependence has a negative impact. However, the effect of inflation is sensitive to the choice of proxy for financial development. Hence, whether a factor is good or bad for financial development depends on the indicator used as a proxy for financial development. Moreover, constructing a new proxy by Principal Components Analysis that summarizes the most information of all the available proxies is an efficient way to reflect the characteristics of financial development.

Keywords: Financial development; Principal Components Analysis; Yemen. (search for similar items in EconPapers)
JEL-codes: O11 O16 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.mfa.com.my/wp-content/uploads/2017/12/ ... 2-48-Badeeb-Lean.pdf (application/pdf)

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:mfa:journl:v:25:y:2017:i:2:p:32-48

Access Statistics for this article

Capital Markets Review is currently edited by Hooy Chee Wooi

More articles in Capital Markets Review from Malaysian Finance Association
Bibliographic data for series maintained by Capital Market Review ().