The heterogeneous effect of technology and macroeconomic policies on financial market development

Farzan Yahya (), Muhammad Waqas (), Muhammad Hussain () and Abdul Haseeb Tahir ()
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Farzan Yahya: College of Finance and Economics, Nanchang Institute of Technology
Muhammad Waqas: Jiangsu University of Science and Technology
Muhammad Hussain: Xidian University
Abdul Haseeb Tahir: Nanjing University of Science and Technology

Quality & Quantity: International Journal of Methodology, 2024, vol. 58, issue 2, No 6, 1146 pages

Abstract: Abstract This study examines the heterogeneous effect of technological advancement, anti-monopoly policies, government transparency, and macroeconomic stability on financial market development. A panel data of 74 countries over the period 2007 to 2017 is selected. Based on simultaneous panel quantile regression (SPQR), the findings reveal that macroeconomic stability improves financial market development after the financial markets attain a certain level of efficiency (50th and 90th). Similarly, there is an asymmetric effect of antimonopoly policies on financial market development and a stronger effect is observed for intermediate markets. On the other hand, no significant effect of transparent government policy is indicated at any quantile. Lastly, the “noise trading” mechanism of technology advancement is demonstrated by SPQR estimations, especially for least and highly developed financial markets. These findings suggest that countries could attain financial market efficiency by implementing anti-monopoly policies so that corruption and bureaucratic power could be cramped effectively. Nonetheless, continuous monitoring is essential to sustain the value-enhancing mechanisms for financial activities so that information asymmetry issues emerge from technology advancement and competition is avoided.

Keywords: Financial market development; Technological advancement; Anti-monopoly policies; Government transparency; Macroeconomic stability; Panel quantile regression (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11135-023-01649-0

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