Fulltext

What Determines Financial Development? Culture, Institutions or Trade

Herger, Nils ; Hodler, Roland ; Lobsiger, Michael

In: Review of World Economics, 2008, vol. 144, no. 3, p. 558-587

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    Titre
    • What Determines Financial Development? Culture, Institutions or Trade
    Auteur
    • Herger, Nils. Department of Economics, University of Berne, Schanzeneckstrasse 1, CH-3001, Berne, Switzerland
    • Hodler, Roland. University of Melbourne, Melbourne, VIC, Australia
    • Lobsiger, Michael. Department of Economics, University of Berne, Schanzeneckstrasse 1, CH-3001, Berne, Switzerland
    Type de document
    • Postprint
    Langue
    • Anglais
    Publié dans
    • Review of World Economics, 2008, vol. 144, no. 3, p. 558-587. Springer-Verlag; www.springer.de
    Autre version électronique
    Identifiant OAI-PMH
    • oai:doc.rero.ch:316493
    Summary
    This paper endeavours to determine in how far theories emphasising cultural values, dysfunctional institutions or impediments to trade can explain the vast differences in the size of financial systems across the globe. To account for endogeneity, an instrumental variables approach is pursued. For a cross-section of countries, we find that trade openness and institutions constraining the political elite from expropriating financiers tend to promote financial development. Conversely, there is only limited evidence that cultural beliefs and the cost of enforcing financial contracts significantly hamper financial development