Political Institutions and Financial Development An Empirical Study

This paper examines whether political institutional Improvement promotes financial development using a panel dataset of 90 developed and developing countries over 1960-99 The empirical evidence reveals a positive effect of institutional Improvement on financial development at least in the short run particularly for lower Income countries The preliminary evidence by a before-alter event study indicates that a democratic transformation is typically followed by an increase in financial development (C) 2010 Elsevier Ltd All rights reserved