Income Growth-Financial Stability Nexus: The Role of Institutional Quality in Emerging Economies
Abstract
Motivated by the mixed evidence on growth-finance nexus, we explore the case of 23 emerging countries to offer robust insight on the extent to which financial stability(instability) induce or impede income growth. Exploring a dynamic panel estimation technique using system GMM estimator, we find both the banking segment of the financial system captured as non-performing loan and the non-banking segment measured via stock market volatility as viable underlying sources of financial instability causing declining income growth in emerging markets. Quite an interesting finding, however, is the potential of institutional quality as viable for alleviating the probable adverse effects of financial instability on income growth, particularly via corruption control, political stability, and voice of accountability.
Keywords: Financial stability(instability); Institutional quality; Emerging markets; Dynamic panels; Income growth
JEL Codes: C33, E01, E44, O11, O16
DOI: 10.7176/RJFA/12-14-08
Publication date:July 31st 2021
![Download the IISTE publication guideline!](https://www.iiste.org/sub/iiste_footer_journal.jpg)
To list your conference here. Please contact the administrator of this platform.
Paper submission email: RJFA@iiste.org
ISSN (Paper)2222-1697 ISSN (Online)2222-2847
Please add our address "contact@iiste.org" into your email contact list.
This journal follows ISO 9001 management standard and licensed under a Creative Commons Attribution 3.0 License.
Copyright © www.iiste.org