Impact Of Institutional Quality Research Articles

Do tax burdens and currency outside banks drive economic development? Empirics from Ghana

PurposeSome African policymakers have turned their attention towards electronic transaction levy (e-levy) to maximise tax revenues in recent years due to the inability to meet revenue targets. However, some argue that the implementation of an e-levy will increase the tax burden (TB) and the currency outside banks (COB). Primarily, this paper examined the effects of the TB and COB on economic development as well as the impact of institutional quality on moderating the nexus.Design/methodology/approachThis paper used structural equation modelling (SEM) and maximum likelihood (ML) estimation techniques on quarterised data from 1996 to 2020.FindingsThe results show that the TB negatively impacts gross domestic product (GDP) per capita and urbanisation but positively affects the Economic Freedom of the World Index (EFWI). The COB impacts EFWI, GDP per capita and urbanisation positively. Institutional quality moderates the TB and the COB, establishing positive relationships with the economic development indicators.Practical implicationsThe findings strongly imply that the arguments that TB and COB are catalysts for tax evasion and corruption lack substantial empirical evidence.Originality/valueThe examination of the econometric impact of the COB on economic development is one of the first studies in the field. The paper recommends that to drive economic development and accelerate sustainable development goals (SDGs) achievement, tax revenues should be channelled into the productive sectors of the Ghanaian economy.

Impact of Institutional Quality on the Quality of Life in Africa: An Economic Approach

Impact of Institutional Quality on the Quality of Life in Africa: An Economic Approach

Institutional Quality and Economic Growth in Muslim Countries

This research analyzes the link between institutions and growth in a selection of Muslim nations to determine which elements have the most influence. The study spans 20 years, from 2002 to 2021, and employs a cross-country analysis to conclude that only three aspects of institutional quality (government effectiveness, political stability and lack of violence/terrorism, and voice and accountability) are strongly related to economic growth. The findings, obtained through a dynamic panel setting, reveal that most control variables exhibit significant effects consistent with expected outcomes. However, the investment coefficient, while positive, lacks statistical significance, suggesting that the impact of investment on economic growth in Muslim nations is not robust enough to be statistically validated. Moreover, the study delves into institutional quality's impact on economic performance and finds that three out of five variables significantly influence growth. Government effectiveness, political stability, and absence of violence/terrorism demonstrate substantial positive correlations, particularly at the 1% significance level. While still positively related to economic growth, regulatory quality and the rule of law only exhibit significance at the 10% level. To further understand the impact on economic development, this paper advises that future research explore numerous institutional quality criteria and segregate Muslim countries based on their political systems.

Impact of institutional quality on ecological footprint: New insights from G20 countries

The complex relationship between institutional quality and ecological footprint (ECF) has been verified in prior literature; however, the subject is still inadequately explored and often disregarded to highlight areas where specific policy tensions exist. Therefore, this study aims to delve into the significance of institutional quality on ECF through a limited information maximum likelihood (LIML) panel analysis in the G20 countries from 2000 to 2022. For a precise evaluation, the study innovatively constructs a composite institutional quality index (IQI) and three indices under the accountability, transparency, and participation dimensions. Additionally, the study develops an economic uncertainty predictor to capture the effects of external economic shocks on the subject. The results obtained from the LIML estimation demonstrate that IQI is substantive in reducing ECF in the recipient panel. Further, the findings highlight that all three dimensions of IQI are significant in abating ECF, while the transparency index yields a higher influence on abating ECF. It is also observed that IQI plays an effective role in modulating the relationships between ECF, financial development, human development, growth, and energy consumption, while it is found to be insignificant in reducing the negative effects of globalization on ECF. Finally, the results indicate that IQI is highly influential in eliminating the adverse impact of external shocks on ECF. The results are robust and have specific policy implications.

Institutional quality and renewable energy capital flows in Africa

This paper investigates the linear and nonlinear relationship between institutional quality and renewable energy capital flows across 20 African countries between 2002 and 2017. The empirical evidence is based on the generalised method of moments estimation technique. The findings suggest that institutional quality has a significant and propelling effect on renewable energy capital flows, implying that strong institutions induce investments in renewable energy in Africa. From an extended analytical exercise, the study further shows a nonlinear inverted U-shaped relationship between institutional quality and energy capital flows. This indicates that the enhancing effect of institutional quality on energy capital flows is achieved at a certain threshold level. In the extreme case, the impact of institutional quality on energy capital flows diminishes. The study recommends that African countries initiate reforms to tame any adverse effect of institutional quality on renewable energy investments in its extreme case. Thus, African countries should develop strong institutions and reinforce their regulatory frameworks because strong institutions can improve societal welfare by reducing political, social and economic unpredictability while boosting trust and investment in renewable energy.

The Impact of Institutional Quality and Financial Development on Economic Growth: The Case of Sub-Saharan African Countries

Finansın ve kurumların ekonomik büyüme için katalizör rolü giderek ivme kazanmaktadır. Gelişmekte olan birçok ülkeyi kapsayan Sahra Altı Afrika Ülkeleri, zengin doğal kaynaklara rağmen, gelişmiş ekonomiler seviyesine ulaşamamışlardır. Bu çalışmada ekonomik büyüme, finansal gelişme ve kurumsal kalite arasındaki ilişkiyi değerlendirmek için 2002'den 2019'a kadar 42 Sahra Altı ülkesi eşbütünleşme analizi ile incelenmiştir. Çalışma bulguları, hem finansal gelişmenin hem de kurumsal kalitenin ekonomik büyüme ile eşbütünleşme ilişkisi içinde olduğunu göstermektedir. Ayrıca nedensellik analizi, ekonomik büyümenin finansal gelişmeyi teşvik ettiğini, kurumsal kalitenin ekonomik büyümeyi desteklediğini ve ekonomik büyümenin de finansal gelişmeyi beslediğini ortaya koymuştur.

The impact of institutional quality, natural resources, and finance-growth on China's economic recovery: An empirical study

Developing economies are opening up to trade & financial expansion, which may impact the economic evolution. This research adds in literature by investigating the connection between financial development, institutional quality, natural resources, and their impact on China's economic performance (1977–2021). The Johansen cointegration technique examines the long-run cointegrating relationship among variables.The vector error correction model captures the longrun and short-run co-efficients. The results reveal that high population expansion lowers growth but natural resource quality and institutional quality have the opposite effects. The results of the study show that the nexus between gross fixed capital formation & financial development do not stimulate growth, but rather institutional quality moderates effect of natural resource rent on finance. In short, this study provides a novel hypothesis for policymakers to evaluate the significance of institutions in developing realistic estimates and policy inputs and support a robust role for institutional quality and natural resource exploration for rapid growth.

The impact of institutional quality on Morocco's macroeconomic resilience to external shocks

The impact of institutional quality on Morocco's macroeconomic resilience to external shocks

The impact of institutional quality on country-level variations in foreign equity shares in transition economies

PurposeThis paper aims to examine the influence of formal and informal institutional quality on country-level variations in foreign equity shares in transition economies (TEs).Design/methodology/approachDrawing on institutional theory and transaction cost theory, this paper examines the influence of formal and informal institutional quality on country-level variations in foreign equity shares in TEs. The authors use a two-step empirical strategy, identifying clusters of explanatory variables and running generalized least squares random effect estimations to test for the influence of explanatory and control variables on foreign equity shares.FindingsForeign equity share is positively affected by informal institutions and negatively by formal institutions. However, when control for stage of transition we find that the the presence of informal institutions in more rapidly or advanced transforming economies negatively influences foreign equity shares. Complex infrastructure discourages foreign equity shareholdings, and foreign companies use informal practices to overcome unfavourable host country conditions. Government size has a negative effect, and gross domestic product per capita positively affects foreign equity shares.Research limitations/implicationsThe study is the new groundwork for the re-enactment of a fruitful discussion on foreign equity. The study has practical implications for managers, too – managers of foreign-owned firms operating in weakly installed institutional environments should carefully analyse the entry strategies because of the high presence of informal institutions. Furthermore, managers could understand the various facilitation roles of informal institutions in any firm internationalisation effort to arrive at optimal ownership holdings for better internationalisation performance. Although the study is based on a sample of transition countries, the findings have implications for other emerging economies’ contexts sharing similar institutional settings.Originality/valueThis study provides a unique empirical investigation and evidence based on country-level indicators on the effect of formal and informal institutions on foreign equity shares holdings in TEs, reinforcing the importance of impacts of both the formal and informal dimensions on ownership decisions of foreign investors.

The Impact of Institutional Quality on Economic Growth: Panel Evidence

The aim of the present study is twofold. First, we develop a theoretical model which incorporates the role of institutions in promoting economic growth. The theoretical model predicts that rent seeking activities decrease as institutional quality improves, and hence income increases and vice versa. Second, we conduct an empirical analysis to quantify the impact of institutions on economic growth in selected Asian economies over the period 1996- 2012 by employing both static and dynamic panel system Generalised Method of Moments (GMM) technique with fixed effects. The empirical results reveal that institutions indeed are important in determining the long run economic growth in Asian economies. However, the impact of institutions on economic growth differs across Asian economies and depends on the level of economic development. The results reveal that institutions are more effective in developed Asia than developing Asia. This evidence implies that different countries require different set of institutions to promote long term economic growth. Keywords: Institutions, Economic Growth, Panel Evidence, Asia

Impact of institutional quality on firms' debt maturity in developing nations

Impact of institutional quality on firms' debt maturity in developing nations

Impact of institutional quality on firms' debt maturity in developing nations

Impact of institutional quality on firms' debt maturity in developing nations

The impact of institutional quality on economic growth: Evidence from post-soviet countries

The paper investigates the long-run impact of the institutional environment on economic growth for the sample of post-Soviet countries in 1996-2021. Using the Autoregressive Distributive Lag Model, we found that a U-shaped link exists between institutional quality and economic growth. Regarding the institutional quality dimensions, a similar link was observed for four out of six factors (POLSTAB, GOVEFF, RULELAW, CONTCORR). In contrast, the other two dimensions (REGQUAL, VOACC) exhibited inverted U-shaped impact on the dependent variable. Moreover, findings provide insight into the impact of control variables such as inflation (INF), openness (OPE), and population growth rate (POPGROWTH) on economic growth. More precisely, openness was found to have positive impact on the dependent variable, while inflation and population growth rate both had negative effect on economic growth. Based on these results, the paper suggests some policy implications for post-Soviet countries in terms of achieving economic growth by improving the institutional quality environment.

The Impact of Financial Development and Institutional Quality on Environmental Conditions: Evidence from the MENA Region

Abstract The literature on the association between financial development and environment quality covers many dimensions. Nonetheless, the role of governance and institutional quality in this relationship has been highlighted moderately. Consequently, this research aims at extending the existing literature on the impact of financial development on CO2 emission, by integrating the role of institutional quality in the financial development-carbon emission nexus. By adopting a panel dataset of 20 MENA countries between 2002 and 2018 and using dynamic GMM models, the study examines firstly the impact of institutional quality on carbon emissions and revealed the important role of government effectiveness and quality of regulation in preserving environment quality. Furthermore, the paper tests how the combination of financial development and institutional quality can change the dynamic of their separate control ability on pollution. The results show indeed that their impact on CO2 emissions is amplified and changes from non-Granger cause type to Granger cause type.

The impact of institutional quality on foreign direct investment: empirical analysis based on mediating and moderating effects

The purpose of this paper is to investigate the relationship between institutional quality and foreign direct investment (FDI) inflows using panel data of 42 G20 countries from 2005 to 2020. The results indicate a positive association between them. Mediating analyses reveal that institutional quality attracts FDI inflows by increasing trade openness, accelerating industrial structure optimization, and encouraging technological innovation. Furthermore, financial development, tax level, and natural resource abundance moderates the positive association between institutional quality and FDI inflows. Among them, financial development and natural resource abundance strengthen the promoting role of institutional quality in attracting FDI; the tax level weakens this process. These findings have implications for policymakers seeking to make full use of favourable institutions to achieve sustainable growth of FDI.

Determinants of logistics’ performance: a new approach towards analysis of economic corridors and institutional quality impact

Determinants of logistics’ performance: a new approach towards analysis of economic corridors and institutional quality impact

Modeling the macroeconomic determinants of environmental degradation in E‐7 countries: The role of technological innovation and institutional quality

Environmental degradation poses a severe threat to life on earth. Similarly to other countries, emerging seven (E‐7) countries have been struggling to decrease their dependence on non‐renewable energy sources by adopting environment friendly technologies for reducing environmental deterioration and to achieve sustainable development goals (SDGs) of the United Nations. In present study, we reassessed the technological policies of E‐7 countries, and addressed the issues of affordable and clean energy, institutional quality (IQU), and sustained economic growth (EGR) to address the problem of environmental deterioration. For this purpose, we have investigated the role of renewable energy consumption (REC), technological innovations (TINs), IQU, and EGR on CO2 emissions (CE) by using the panel quantile regression (PQR) for the period from 1996 to 2020. The empirical outcomes of FGLS reveal that a 1% increase in REC, TIN, and IQU reduces the CE by 0.145%, 0.233%, and 0.249%, while a 1% rise in EGR and population (POPU) raises the CE by 0.993% and 1.546% respectively. Similarly, the results of PQR demonstrate that REC, TIN, and IQU reduce CE, whereas EGR and POPU increase environmental degradation. The impact of TIN on CE is high at lower quantiles and low at higher quantiles. The impact of IQU on CE is low at lower quantiles and high at higher quantiles Based on these findings, we have recommended a comprehensive SDG‐oriented policy framework, so that E‐7 countries can make progress towards achieving the objectives of SDG 16, SDG 13, SDG 7, SDG 8, and SDG 9.

Impact of Institutional Quality on Trade Performance of Small and Medium Enterprises in Pakistan

The trade economy is dependent upon the institutional quality of the country. It affects the ease of doing business in the economy. It is plausible to think that, how institutional quality can affect the trading performance of Pakistan. Small & medium enterprises (SMEs) are playing the role of the backbone of the trade sector in Pakistan. Contribution SMEs can be significantly improved, by improving the supporting macroeconomic indicators. This paper studies the short-run and the long-run association between SME trade growth and cost of production, relative prices, and Institutional quality in Pakistan. It also examines the Environmental Kuznets curve (EKC) hypothesis, between SME trade growth and institutional quality in Pakistan. This study utilizes secondary data, which is taken from multiple secondary sources, including the SMEDA, Pakistan Economic Survey, and world development indicators. The biannual data is assembled up for 38 observations from (2000 to 2019). This study uses Auto Regressive Distributive Lag (ARDL) bound testing method to examine the short run and long run connections between SMEs’ trade growth and macro-economic variables, like; relative prices, Cost of production. Gross Domestic Product, exchange rate, and institutional quality. These variables are selected from the available literature. The study finds that the short-run response of SMEs trade is not significant, but it significantly responds to macro-economic indicators in long run. The institutional quality has a non-linear relationship with SMEs trade growth. This indicates that the pollution heaven hypothesis holds valid even for the case of institutional quality and SMEs trading performance. The study focuses on the optimality of institutional quality for the optimal performance level of SMEs in Pakistan.

Mathematical Models for Analysis the Impact of Institutional Quality and Multilateral Financial Institutions on the Success of Green PPP Projects

Green PPP projects are of great significance to green infrastructure construction and green economic development. This study analyzes 552 Green PPP projects related to sewage treatment and clean energy in African countries during 2005-2019 to determine how institution quality and multilateral financial institutions influence Green PPP projects’ success. We find that (1) successful (failed) Green PPP projects experience increase (decrease) new Green PPP projects’ success rate. (2) Higher private capital risk-taking degree increases the likelihood of failure. (3) Institution quality affects project success through a mixed effect on private capital’s risk-taking degree: rule of law, government effectiveness, control of corruption, and regulatory quality positively promote private capital’s risk taking; voice has an opposite effect. (4) Multilateral financial institutions’ participation in Green PPP projects promotes higher private capital risk taking.

The impact of institutional quality and resources rent on health: The case of GCC

• Resource curse exists in all GCC countries in the short run and long run. • Corruption has had a detrimental effect on life expectancy in almost all GCC countries, both in the short and long run. • Democracy has no significant effect on life expectancy in GCC, both in the short and long run. • Plans and initiatives must be set in order to combat corruption and extend democracy in the long run. • Institutions have a moderating effect on the relationship between life expectancy and resource rent.