How do financial globalization, institutions and economic growth impact financial sector development in European countries?
S. Nasreena✉, M. K. Mahalikb, M. Shahbazc, Qaisar Abbasd
- aDepartment of Economics, Lahore College for Women University, Lahore, Pakistan
- bDepartment of Humanities and Social Sciences, Indian Institute of Technology, Kharagpur-721302, Medinipur West Bengal, India
- cSchool of Management and Economics, Beijing Institute of Technology, China
- dChief of Research Division CAREC Institute, Urmqhi, China
- ✉Corresponding author
Papers open inside SciRah from the original publisher or repository; SciRah never hosts them.
Abstract
This paper examines the role of financial globalization, institutions and economic growth on the development of financial sector in European countries. We use panel data covering the period of 1989-2016. Using the composite index of financial development covers various dimensions of financial market, that is, depth, access and efficiency and four-way classification of institutions as suggested by Rodrick (2005) and Law et al. (2018), the empirical results indicate that economic growth and institutional quality are positively associated with financial development. Contrarily, financial globalization hinders the process of financial sector development. The results are robust to using alternative proxies of economic growth, institutional indicators and capturing the period of financial crisis. These empirical findings suggest policy guidelines to develop financial sector by using globalization, institutional quality and economic growth as economic tools.