The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies
This paper investigates the role of fiscal policy on financial development in Sub-Saharan African economies, drawing on a sample of 23 countries from 2000 to 2021 using the panel ARDL method after evidencing stationarity and co-integration properties among the variables. Our results show that an in...
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| Format: | Article |
| Language: | English |
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Vilnius University Press
2023-12-01
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| Series: | Organizations and Markets in Emerging Economies |
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| Online Access: | https://www.zurnalai.vu.lt/omee/article/view/29385 |
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| author | Charles K. Ricky Okine Michael Appiah Derrick Tetteh |
| author_facet | Charles K. Ricky Okine Michael Appiah Derrick Tetteh |
| author_sort | Charles K. Ricky Okine |
| collection | DOAJ |
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This paper investigates the role of fiscal policy on financial development in Sub-Saharan African economies, drawing on a sample of 23 countries from 2000 to 2021 using the panel ARDL method after evidencing stationarity and co-integration properties among the variables. Our results show that an increase in fiscal policy and institutional quality decreases financial development in the long run. An increase in taxation and expenditure by the government affects the development of finance in SSA countries. Our results also show that an increase in foreign capital and industrial growth increases financial development in the long term. The outcome evidence that the interaction between fiscal policy and institutional quality exhibits a positive effect on financial development. Causality results reveal no directional link between fiscal policy, foreign capital, industrialization, and financial development with institutional quality indicating a single direction. The study suggested that SSA countries should focus on developing policies to track the implementation of adequate fiscal policy systems and structures. Institutional coherence within and between SSA nations is required for efficient fiscal policy development.
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| format | Article |
| id | doaj-art-a7b0c06870ea4a54b88714d5ac798c11 |
| institution | Kabale University |
| issn | 2029-4581 2345-0037 |
| language | English |
| publishDate | 2023-12-01 |
| publisher | Vilnius University Press |
| record_format | Article |
| series | Organizations and Markets in Emerging Economies |
| spelling | doaj-art-a7b0c06870ea4a54b88714d5ac798c112025-02-11T18:16:45ZengVilnius University PressOrganizations and Markets in Emerging Economies2029-45812345-00372023-12-0114310.15388/omee.2023.14.10The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging EconomiesCharles K. Ricky Okine0Michael Appiah1https://orcid.org/0000-0001-9314-4908Derrick Tetteh2https://orcid.org/0000-0001-9314-4908Koforidua Technical University, GhanaUniversity of DubaiUniversity of Cape Coast, Ghana This paper investigates the role of fiscal policy on financial development in Sub-Saharan African economies, drawing on a sample of 23 countries from 2000 to 2021 using the panel ARDL method after evidencing stationarity and co-integration properties among the variables. Our results show that an increase in fiscal policy and institutional quality decreases financial development in the long run. An increase in taxation and expenditure by the government affects the development of finance in SSA countries. Our results also show that an increase in foreign capital and industrial growth increases financial development in the long term. The outcome evidence that the interaction between fiscal policy and institutional quality exhibits a positive effect on financial development. Causality results reveal no directional link between fiscal policy, foreign capital, industrialization, and financial development with institutional quality indicating a single direction. The study suggested that SSA countries should focus on developing policies to track the implementation of adequate fiscal policy systems and structures. Institutional coherence within and between SSA nations is required for efficient fiscal policy development. https://www.zurnalai.vu.lt/omee/article/view/29385fiscal policyfinancial developmentinstitutional qualitypanel ARDLemerging economies |
| spellingShingle | Charles K. Ricky Okine Michael Appiah Derrick Tetteh The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies Organizations and Markets in Emerging Economies fiscal policy financial development institutional quality panel ARDL emerging economies |
| title | The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies |
| title_full | The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies |
| title_fullStr | The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies |
| title_full_unstemmed | The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies |
| title_short | The Linkage Between Fiscal Policy and Financial Development: Exploring the Moderating Role of Institutional Quality in Emerging Economies |
| title_sort | linkage between fiscal policy and financial development exploring the moderating role of institutional quality in emerging economies |
| topic | fiscal policy financial development institutional quality panel ARDL emerging economies |
| url | https://www.zurnalai.vu.lt/omee/article/view/29385 |
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