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Does Institutional Quality Matter for Financial Development and Growth? Further Evidence from MENA Countries
Author(s) -
Kutan Ali M.,
Samargandi Nahla,
Sohag Kazi
Publication year - 2017
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.12097
Subject(s) - foreign direct investment , quality (philosophy) , investment (military) , middle east , business , economics , linkage (software) , development economics , international economics , political science , macroeconomics , philosophy , biochemistry , chemistry , epistemology , politics , gene , law
This study scrutinises the role of institutional quality in the linkage of financial development and economic growth in 21 Middle East and North African (MENA) countries. Using the common correlated effect mean pooled approach and annual data for the period 1980–2012, we find that not all measures of financial development promote economic growth in the absence of institutional quality, but they all augment growth in the presence of institutional quality. Furthermore, we find that foreign direct investment enhances the growth of MENA countries by the development of financial markets.