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The Role of Institutional Quality in Finance-Growth Nexus: Evidence from North African Countries

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  • Imen Mohamed Sghaier

    (University of Sfax)

Abstract

This study aims to determine the relationship between financial development and economic growth with respect to the state of institutional quality in 4 North African countries over the 2000–2018 period. Using the dynamic generalized method of moments in a panel data analysis, we found that financial development has a positive effect on economic growth. Equally important, institutional quality plays a significant and positive role in economic growth. More interestingly, the study finds that institutional development is complementary to financial development. As a policy implication, we recommend that policymakers place special importance on implementing policies that result in the deepening of financial systems, including a sound institutional framework. Thus, by promoting the development of a country’s financial system, economic growth will be accelerated.

Suggested Citation

  • Imen Mohamed Sghaier, 2022. "The Role of Institutional Quality in Finance-Growth Nexus: Evidence from North African Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3472-3491, December.
    • Handle: RePEc:spr:jknowl:v:13:y:2022:i:4:d:10.1007_s13132-021-00850-6
    DOI: 10.1007/s13132-021-00850-6
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    1. Ichiro Iwasaki & Shigeki Ono, 2024. "Economic development and the finance–growth nexus: a meta-analytic approach," Applied Economics, Taylor & Francis Journals, vol. 56(57), pages 8021-8038, December.
    2. Hazwan Haini & Lutfi Abdul Razak & Pang Wei Loon & Sufrizul Husseini, 2023. "Re-examining the finance–institutions–growth nexus: does financial integration matter?," Economic Change and Restructuring, Springer, vol. 56(3), pages 1895-1924, June.

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    More about this item

    Keywords

    Financial development; Institutions; Economic growth; Panel data analysis;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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