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- Title
Re-examining the finance–institutions–growth nexus: does financial integration matter?
- Authors
Haini, Hazwan; Razak, Lutfi Abdul; Wei Loon, Pang; Husseini, Sufrizul
- Abstract
This study examines whether financial integration affects the finance–institutions–growth nexus using a sample of 145 countries from 1995 to 2021. Financial globalization continues to be a dominant phenomenon, despite the concerns on contagion and capital flight issues. We argue that financial integration can potentially crowd out the positive growth effects from both financial development and institutions. Using a dynamic panel estimator to control for endogeneity and simultaneity and multidimensional measures of financial development, institutional quality, and financial integration, we find a nonlinear relationship. More specifically, financial integration is growth-enhancing up to a threshold. Additionally, we find the marginal effects of finance and institutions to be insignificant above this threshold.
- Subjects
FINANCIAL globalization; CAPITAL movements; CONTROL boards (Electrical engineering); FINANCIAL institutions
- Publication
Economic Change & Restructuring, 2023, Vol 56, Issue 3, p1895
- ISSN
1573-9414
- Publication type
Article
- DOI
10.1007/s10644-023-09498-5