Political stability and financial development: An empirical investigation

Financial development; Financial liberalization reforms; Government effectiveness; Political stability; Political structure; Finance; Economics and Econometrics

Résumé :

[en] The significance of political stability as a fundamental political institution within a country is widely acknowledged. However, the intricate interplay between political stability and the development of financial institutions and markets remains inadequately explored. Through an analysis encompassing 123 countries spanning the temporal interval of 1980 to 2017, a discernible pattern emerges: heightened levels of political stability substantively foster the advancement of financial development. This positive association is pronounced in countries characterized by greater government effectiveness, those enacting financial liberalization reforms, and those exhibiting a more democratic political structure. The results are robust to alternative measures of political stability, controlling for country heterogeneity, a two-stage least squares technique using internally generated instruments to address endogeneity issues, among several other robustness tests. Our results emphasize that countries should prioritize the creation of a more politically stable environment, as it not only improves growth prospects, but also creates a climate of confidence for economic agents to actively engage in financial markets.

Disciplines :

Macroéconomie & économie monétaire
Finance

Auteur, co-auteur :

Chletsos, Michael; Department of Economics, University of Piraeus, Piraeus, Greece

SINTOS, Andreas ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) ; Department of Economics, University of Piraeus, Piraeus, Greece

Co-auteurs externes :

yes

Langue du document :

Anglais

Titre :

Political stability and financial development: An empirical investigation

Date de publication/diffusion :

avril 2024

Titre du périodique :

Quarterly Review of Economics and Finance

ISSN :

1062-9769

Maison d'édition :

Elsevier B.V.

Volume/Tome :

Pagination :

252 - 266

Peer reviewed :

Peer reviewed vérifié par ORBi

URL complémentaire :

https://api.elsevier.com/content/article/PII:S1062976924000206?httpAccept=text/xml

Disponible sur ORBilu :

depuis le 03 mars 2024

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Nombre de téléchargements

1 (dont 1 Unilu)

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