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FINANCIAL DEVELOPMENT, ECONOMIC FREEDOM AND ECONOMIC GROWTH: NEW EVIDENCE FROM TUNISIA

Zaïbi Oussama (), Hachicha Ahmed () and Hachicha Fatma
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Zaïbi Oussama: Department of Economic Development, Faculty of Economics and Management of Sfax, Tunisia
Hachicha Ahmed: Department of Economic Development, Faculty of Economics and Management of Sfax, Tunisia
Hachicha Fatma: Department of Finance, Institute of Higher Commercial Studies of Sfax, Tunisia

Economic Review: Journal of Economics and Business, 2017, vol. 15, issue 2, 7-18

Abstract: This article investigates the effect of financial development on economic growth conditions well-developed institutions in Tunisia as a case study during the period 1980-2014, using the generalized moment method (GMM) to analyze the panel data. We have empirically examined the relationship between financial development and institutions using the index of economic freedom as an institutional variable. It has been found that economic freedom can be used as a proxy of developed institutions and that the effect of financial development on economic growth improves in the presence of the variable of economic freedom. We have also found that economic freedom is beneficial to growth and favors the relationship between financial development and the developed institutions and their combined effects on economic growth. These findings suggest the need to promote greater economic freedom and well-developed institutions to improve the relationship between financial development and economic growth.

Keywords: Financial development; Institutions; Economic freedom; Economic growth (search for similar items in EconPapers)
JEL-codes: F63 (search for similar items in EconPapers)
Date: 2017
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