Exploring the moderating effect of regulatory quality on the relationship between financial development and economic growth/economic volatility for developed and developing countries
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引用次数: 0
Abstract
This study examines the moderating effect of regulatory quality on the relationship between financial development and economic growth/economic volatility. We employ the Panel Corrected Standard Error estimation method, supplemented by a robustness check using the Generalized Method of Moments. Our findings offer interesting insights into the relationship between financial development and outcomes for the economy. In developed countries, regulatory quality positively moderates the relationship between banking-based financial development and economic growth. Hence, policymakers should prioritize the maintenance of a high-quality institutional and regulatory environment conducive to both banking-based and market-based growth. Continual efforts to enhance regulatory quality and adopt robust approaches are imperative. Conversely, this study does not detect a significant moderating effect of regulatory quality on the relationship between financial development and economic growth in developing countries. Policymakers in these contexts must accelerate efforts to bolster institutional and regulatory frameworks, emphasizing the enhancement of regulatory quality. Care should be taken to avoid overly stringent regulations, particularly at lower levels of financialization, to prevent potential counter-productivity. Instead, a gradual approach to improving regulatory quality is advisable. Furthermore, policymakers should recognize that regulatory quality mitigates the contribution of banking-based financial development to economic volatility, a phenomenon observed in both developed and developing countries.
期刊介绍:
Peer Review under the responsibility of Borsa İstanbul Anonim Sirketi. Borsa İstanbul Review provides a scholarly platform for empirical financial studies including but not limited to financial markets and institutions, financial economics, investor behavior, financial centers and market structures, corporate finance, recent economic and financial trends. Micro and macro data applications and comparative studies are welcome. Country coverage includes advanced, emerging and developing economies. In particular, we would like to publish empirical papers with significant policy implications and encourage submissions in the following areas: Research Topics: • Investments and Portfolio Management • Behavioral Finance • Financial Markets and Institutions • Market Microstructure • Islamic Finance • Financial Risk Management • Valuation • Capital Markets Governance • Financial Regulations