IDEAS home Printed from https://ideas.repec.org/a/wsi/jicepx/v12y2021i03ns1793993321500149.html
   My bibliography  Save this article

The Nonlinear Impact of Institutional Quality on International Reserves: International Evidence

Author

Listed:
  • Chee-Hong Law

    (School of Social Sciences, Universiti Sains Malaysia, Gelugor 11800 Penang, Malaysia)

  • Siew-Voon Soon

    (��Department of Economics and Applied Statistics, Faculty of Business and Economics, Universiti Malaya 50603 Kuala Lumpur, Wilayah Persekutuan, Malaysia)

  • K. U. Ehigiamusoe

    (��School of Accounting and Finance, Faculty of Business and Law, Taylor’s University, 47500 Subang Jaya, Selangor, Malaysia)

Abstract

This paper investigates the nonlinear effect of institutional quality on the holding of international reserves by applying the two-step system generalized method of moments on data consisting of 67 countries from 1996 to 2016. The hypothesis is that the association between institutional quality and international reserves has an inverted U pattern. The coefficient sign of the institutional quality and its square term supports the hypothesis. Besides, the marginal effects suggest that the higher the institutional quality index, the lower the demand for reserves. The outputs indicate the importance of good institutional quality in reducing the overdependence on international reserves.

Suggested Citation

  • Chee-Hong Law & Siew-Voon Soon & K. U. Ehigiamusoe, 2021. "The Nonlinear Impact of Institutional Quality on International Reserves: International Evidence," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 12(03), pages 1-21, October.
    • Handle: RePEc:wsi:jicepx:v:12:y:2021:i:03:n:s1793993321500149
    DOI: 10.1142/S1793993321500149
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S1793993321500149
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S1793993321500149?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:jicepx:v:12:y:2021:i:03:n:s1793993321500149. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/jicep/jicep.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.