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Do Political Institutions and Culture Jointly Matter for Financial Development? A Cross-Country Panel Investigation

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  • Deepraj Mukherjee

    (Kent State University at Stark, North Canton, OH 44720, USA)

  • Nabamita Dutta

    (University of Wisconsin La Crosse, La Crosse, WI 54601, USA)

Abstract

This article investigates the role of political institutions and culture in creating an efficient financial infrastructure for a country. It further delves into this relationship and addresses the question: do both types of institutions mentioned above affect financial development of a country, jointly? Our findings support the established notion in the literature that institutions matter for financial development. We show both these types of institutions – political institutions and culture – jointly promote financial development. Further, our result stresses that these two types of institutions behave as complements – the presence of efficient political institutions augment the effectiveness of culture and, thus, financial development is enhanced. Our results are robust to various proxies of institutions and alternate estimation models.

Suggested Citation

  • Deepraj Mukherjee & Nabamita Dutta, 2013. "Do Political Institutions and Culture Jointly Matter for Financial Development? A Cross-Country Panel Investigation," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 13(2), pages 203-232, June.
    • Handle: RePEc:wsi:gejxxx:v:13:y:2013:i:02:n:gej-2012-0028
    DOI: 10.1515/GEJ-2012-0028
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