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Culture and Institutional Changes and Their Impact on Economic and Financial Development Trajectories

Author

Listed:
  • Elena Vladimirovna Travkina

    (Department of Banking and Monetary Regulation, Financial University under the Government of the Russia Federation, 125167 Moscow, Russia)

  • Alim Borisovich Fiapshev

    (Department of Banking and Monetary Regulation, Financial University under the Government of the Russia Federation, 125167 Moscow, Russia)

  • Marianna Tolevna Belova

    (Department of Banking and Monetary Regulation, Financial University under the Government of the Russia Federation, 125167 Moscow, Russia)

  • Svetlana Evgenievna Dubova

    (Department of Banking and Monetary Regulation, Financial University under the Government of the Russia Federation, 125167 Moscow, Russia)

Abstract

The quality of institutions occupies a central place in the set of non-economic factors influencing macroeconomic dynamics and the development of financial markets. This quality is largely shaped by objective factors that accompany the historical process. Therefore, this study focuses on the driving forces of this process and how they affect the quality of institutions. It is shown that the main such force or source of institutional change is culture, interpreted in a broad sense, which includes not only that accumulated at different stages of the historical process relevant heritage, but also behavioral attitudes and value beliefs prevailing in society that affect decision-making. The thesis about the importance of culture as a source of formation of the quality of national institutions and a factor of sustainable economic dynamics is substantiated through the example of specific historical events. Underestimation of this conditionality often prioritizes economic policy goals of financial development without due consideration and assessment of institutional constraints. This factor in macroeconomic decision-making is mainly characteristic of emerging market economies. At the same time, the results of research in recent decades indicate that the impact of financial development on macroeconomic dynamics is positive and strong in conditions of high-quality institutions. This allows the article to assess the role of finance and the quality of institutions differently in the set of state economic policy priorities. As applied to individual countries with obvious deficiencies in the institutional environment, this study, referring to historical experience and modern empirical material, puts forward and substantiates the thesis that ensures a high quality of institutions is the most important priority of transforming financial development into a factor of positive and sustainable economic growth.

Suggested Citation

  • Elena Vladimirovna Travkina & Alim Borisovich Fiapshev & Marianna Tolevna Belova & Svetlana Evgenievna Dubova, 2023. "Culture and Institutional Changes and Their Impact on Economic and Financial Development Trajectories," Economies, MDPI, vol. 11(1), pages 1-13, January.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:1:p:14-:d:1025938
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    References listed on IDEAS

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    1. Nathan Nunn, 2012. "Culture and the Historical Process," Economic History of Developing Regions, Taylor & Francis Journals, vol. 27(S1), pages 108-126.
    2. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.
    3. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    4. Law, Siong Hook & Azman-Saini, W.N.W. & Ibrahim, Mansor H., 2013. "Institutional quality thresholds and the finance – Growth nexus," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5373-5381.
    5. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    6. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
    7. Elena Vladimirovna Travkina & Elena Petrovna Ternovskaya & Alim Borisovich Fiapshev, 2022. "The Role of Non-Bank Financials in the Formation of Long-Term Resources for Economic Growth in Russia," Economies, MDPI, vol. 10(1), pages 1-11, January.
    8. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
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    Cited by:

    1. Cao, Lansheng & Gu, Ming & Jin, Ding & Wang, Changyan, 2023. "Geopolitical risk and economic security: Exploring natural resources extraction from BRICS region," Resources Policy, Elsevier, vol. 85(PB).

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