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Institutional and macroeconomic determinants of financial development in the OIC countries

The role of a well-developed and functioning financial system to the growth process of nations is strongly recognized in both the academia and policy cycles. Consequently, the question arose that if financial development is so important to economic growth, then, what determines it is equally worthy...

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Main Authors: Abubakar, Abdulsalam, Kassim, Salina
Format: Article
Language:English
English
English
Published: Inderscience Publisher 2018
Subjects:
H Social Sciences (General)
HG1501 Banking
HG3368 Islamic Banking and Finance
Online Access:http://irep.iium.edu.my/60124/6/60124_Institutional%20and%20macroeconomic%20determinants_SCOPUS.pdf
http://irep.iium.edu.my/60124/20/60124-Institutional%20and%20macroeconomic%20%20%28evidence%20from%20publisher%27s%20website%20for%20MyRA%29.pdf
http://irep.iium.edu.my/60124/21/60124%20-in-press%20article.pdf
http://irep.iium.edu.my/60124/
http://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=GBER
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spelling my.iium.irep.601242024-05-02T01:21:15Z http://irep.iium.edu.my/60124/ Institutional and macroeconomic determinants of financial development in the OIC countries Abubakar, Abdulsalam Kassim, Salina H Social Sciences (General) HG1501 Banking HG3368 Islamic Banking and Finance The role of a well-developed and functioning financial system to the growth process of nations is strongly recognized in both the academia and policy cycles. Consequently, the question arose that if financial development is so important to economic growth, then, what determines it is equally worthy of attention. This study is inspired by this concern and the fact that financial development in the OIC member countries is low relative to other developing countries. The study investigated the institutional and macroeconomic determinants of financial development in 50 OIC member countries over the period 2003 to 2011. Due to the potentials of country specific effects and endogeneity of explanatory variables, a dynamic panel approach that is system-GMM was employed. The results revealed that overall level of income positively influences financial development, and exchange rate encourages financial depth and lending activities. Financial openness is found to only promote financial depth, while institutional quality only promotes lending activities. On the other hand, inflation stimulates bank private credit and reduces the depth of the financial sector. This mixed results implied that, policy makers in the OIC countries, shall adopt a hybrid of economic and financial policies as well as implement political, legal and governance reforms in order to strike a balance between the needs of both the suppliers and users of funds, enhance financial development and hence promote economic growth. Inderscience Publisher 2018 Article NonPeerReviewed application/pdf en http://irep.iium.edu.my/60124/6/60124_Institutional%20and%20macroeconomic%20determinants_SCOPUS.pdf application/pdf en http://irep.iium.edu.my/60124/20/60124-Institutional%20and%20macroeconomic%20%20%28evidence%20from%20publisher%27s%20website%20for%20MyRA%29.pdf application/pdf en http://irep.iium.edu.my/60124/21/60124%20-in-press%20article.pdf Abubakar, Abdulsalam and Kassim, Salina (2018) Institutional and macroeconomic determinants of financial development in the OIC countries. Global Business and Economics Review, 20 (4). pp. 410-424. ISSN 1097-4954 E-ISSN 1745-1329 http://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=GBER
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
English
English
topic H Social Sciences (General)
HG1501 Banking
HG3368 Islamic Banking and Finance
spellingShingle H Social Sciences (General)
HG1501 Banking
HG3368 Islamic Banking and Finance
Abubakar, Abdulsalam
Kassim, Salina
Institutional and macroeconomic determinants of financial development in the OIC countries
description The role of a well-developed and functioning financial system to the growth process of nations is strongly recognized in both the academia and policy cycles. Consequently, the question arose that if financial development is so important to economic growth, then, what determines it is equally worthy of attention. This study is inspired by this concern and the fact that financial development in the OIC member countries is low relative to other developing countries. The study investigated the institutional and macroeconomic determinants of financial development in 50 OIC member countries over the period 2003 to 2011. Due to the potentials of country specific effects and endogeneity of explanatory variables, a dynamic panel approach that is system-GMM was employed. The results revealed that overall level of income positively influences financial development, and exchange rate encourages financial depth and lending activities. Financial openness is found to only promote financial depth, while institutional quality only promotes lending activities. On the other hand, inflation stimulates bank private credit and reduces the depth of the financial sector. This mixed results implied that, policy makers in the OIC countries, shall adopt a hybrid of economic and financial policies as well as implement political, legal and governance reforms in order to strike a balance between the needs of both the suppliers and users of funds, enhance financial development and hence promote economic growth.
format Article
author Abubakar, Abdulsalam
Kassim, Salina
author_facet Abubakar, Abdulsalam
Kassim, Salina
author_sort Abubakar, Abdulsalam
title Institutional and macroeconomic determinants of financial development in the OIC countries
title_short Institutional and macroeconomic determinants of financial development in the OIC countries
title_full Institutional and macroeconomic determinants of financial development in the OIC countries
title_fullStr Institutional and macroeconomic determinants of financial development in the OIC countries
title_full_unstemmed Institutional and macroeconomic determinants of financial development in the OIC countries
title_sort institutional and macroeconomic determinants of financial development in the oic countries
publisher Inderscience Publisher
publishDate 2018
url http://irep.iium.edu.my/60124/6/60124_Institutional%20and%20macroeconomic%20determinants_SCOPUS.pdf
http://irep.iium.edu.my/60124/20/60124-Institutional%20and%20macroeconomic%20%20%28evidence%20from%20publisher%27s%20website%20for%20MyRA%29.pdf
http://irep.iium.edu.my/60124/21/60124%20-in-press%20article.pdf
http://irep.iium.edu.my/60124/
http://www.inderscience.com/info/ingeneral/forthcoming.php?jcode=GBER
_version_ 1797904068470898688
score 13.211869

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