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GOVERNANCE AND FINANCIAL FRAGILITY
Author(s) -
Francis Michael
Publication year - 2004
Publication title -
economic papers: a journal of applied economics and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.245
H-Index - 19
eISSN - 1759-3441
pISSN - 0812-0439
DOI - 10.1111/j.1759-3441.2004.tb00990.x
Subject(s) - volatility (finance) , corporate governance , fragility , financial fragility , economics , monetary economics , investment (military) , econometrics , macroeconomics , finance , financial crisis , political science , chemistry , politics , law
Using data from a cross‐sectional sample of 81 countries, this paper provides empirical evidence to support the hypothesis that the quality of governance is an important determinant of financial fragility (as measured by the volatility of investment over time). Not only do the results suggest that better governance reduces investment volatility, but interestingly the results also suggest that governance variables are better able to explain volatility in investment than some standard macroeconomic measure such as inflation.
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