FINANCIAL DEVELOPMENT, TECHNOLOGY AND ECONOMIC DEVELOPMENT: THE ROLE OF INSTITUTIONS IN DEVELOPING COUNTRIES

Samina Sabir, Rashid Latif, Unbreen Qayyum and Kamran Abass
Additional contact information
Samina Sabir: University of Azad Jammu and Kashmir, Muzaffarabad, Azad Jammu and Kashmir, Pakistan
Rashid Latif: University of Azad Jammu and Kashmir, Muzaffarabad, Azad Jammu and Kashmir, Pakistan
Kamran Abass: University of Azad Jammu and Kashmir, Muzaffarabad, Azad Jammu and Kashmir, Pakistan

Annals of Financial Economics (AFE), 2019, vol. 14, issue 03, 1-25

Abstract: Financial sector development plays a pivotal role in the process of economic growth and development through mobilization of savings and creating investment opportunities. Financial development also increases the level of technology by providing finance to entrepreneurs for technological innovations which leads to economic growth. Moreover, financial markets develop rapidly in those countries which have strong legal system to enforce property rights, support private contractual arrangement and protect the rights of investors that can support real economic activities. Therefore, the presence of good quality institutions strengthens financial development which leads to technological development and growth. This study investigates the impact of financial development, technology and institutions on economic growth of selected developing countries over the time span of 1996–2015. This study extends the Augmented Solow growth model by incorporating variables such as financial development, technology, institutions and their interaction terms in the model. Due to endogeneity problem, the empirical model used in the study is estimated by System Generalized Method of Moments (System-GMM). Empirical results show that financial development, technology and institutions have very strong effects on the economic growth developing countries. To attain a sustainable economic growth, developing countries should develop their institutions which are necessary for the effective functioning of financial markets that stimulate economic growth by providing finance to entrepreneurs for innovations in technological sectors.

Keywords: Financial development; technology; institutions; economic growth; development (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S201049521950012X
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: https://EconPapers.repec.org/RePEc:wsi:afexxx:v:14:y:2019:i:03:n:s201049521950012x

Ordering information: This journal article can be ordered from

DOI: 10.1142/S201049521950012X

Access Statistics for this article

Annals of Financial Economics (AFE) is currently edited by Michael McAleer

More articles in Annals of Financial Economics (AFE) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().