Public sector efficiency: the role of financial sector development

Aguima Aime Bernard Lompo ()
Additional contact information
Aguima Aime Bernard Lompo: CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne

Working Papers from HAL

Abstract: The purpose of this paper is to assess the extent to which financial sector development can increase public sector efficiency. We take advantage of new global public sector efficiency scores for developing and developed countries to address this issue. Public efficiency scores are computed via Stochastic Frontier Analysis (SFA). Then, we rely notably on panel methodology to estimate the effect of financial development on changes in efficiency scores. For a sample of 158 developing and developed countries over the period 1990–2017, we find that a high level of financial development contributes to high public expenditure efficiency. Robustness checks confirm these results and rule out potential biases from omitted variables, simultaneity, or reverse causality. The article explores the channels through which financial development influences expenditure efficiency, emphasizing the role of fiscal performance, per capita income, and institutional quality, particularly corruption control. The analysis also examines heterogeneity in the effectiveness of financial development based on various factors, such as types of financial development variables, macroeconomic conditions, and institutional factors.

Keywords: Financial development; Public sector efficiency; Parametric approach; Government spending; Tax revenue; Economic growth. (search for similar items in EconPapers)
Date: 2024-10-10
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:hal:wpaper:hal-04731269

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().