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Quantifying Financial Development: A Panel Study on the Individual and Combined Effects of Remittances, Trade openness and Regulatory quality in Emerging Economies

Ezechukwu, Cassandra (2019) Quantifying Financial Development: A Panel Study on the Individual and Combined Effects of Remittances, Trade openness and Regulatory quality in Emerging Economies. Masters thesis, Dublin, National College of Ireland.

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Abstract

This paper investigates the individual and combined influence of an economy’s trade openness, remittances and regulatory quality as determinants of financial development. The research, which focused on studying specifically the effects from emerging economies, presents evidence from 50 developing countries for the periods 1998 - 2017. In conducting this study, panel analysis approach is applied where pooled OLS, fixed effects and random effects models are developed after which a panel Hausman test selects the fixed effects as the optimal model. The advantage and rationale for using this approach was to account for unobserved heterogeneity in the model i.e. obtaining valid statistical inferences in instances where other relevant variables that are correlated but unobserved by the model may exist. The results show that for every 10% increase in trade openness there will be a corresponding 0.7% approximate increase in financial development, while implementing policies that improve the quality of regulation by one unit will advance financial sector development by 3.3%. Conversely, for every year on increase in remittance figures, it is expected that there will be a drop in financial development and by a margin of approximately 0.5%. This empirical evidence therefore reveals that while financial sector development can be significantly improved by better trade openness and improved regulatory quality, large inward remittances will have an adverse effect and are insignificant. Additionally, the selection of the fixed effects model sheds light to the existence of homogeneity which means the effects are uniform across developing countries.

Item Type: Thesis (Masters)
Subjects: H Social Sciences > HB Economic Theory
Q Science > QA Mathematics > Electronic computers. Computer science
T Technology > T Technology (General) > Information Technology > Electronic computers. Computer science

H Social Sciences > Economics > Macroeconomics
Divisions: School of Computing > Master of Science in FinTech
Depositing User: Dan English
Date Deposited: 02 Jun 2020 11:03
Last Modified: 02 Jun 2020 11:03
URI: http://trap.ncirl.ie/id/eprint/4218

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