Indicators Of Institutional Quality Research Articles

Financial Development, Institutions, and Technological Innovation in Africa

ABSTRACTMost African countries are notably confronted with inefficient financial systems, weak institutional arrangements, and low technological innovations. This motivates this study to examine if financial development has any implications on technological innovation in the region, while putting the direct and nonlinear role of institutional quality into consideration. We find that, excluding institutional quality, financial development has a negative impact on technological innovation. The findings are not altered when the influence of institutional quality is linearly examined. The threshold results, however, show that financial development positively affects technological innovation at the low institutional quality level, whereas financial development has no significant impact on technological innovation at higher institutional quality levels. This paradox, although in contrast to expectation, explains the reality of the institutional arrangements in the African countries. They are not just weak, but very restrictive, thereby concentrating the financial means into the hands of few elites who then discretionarily engage in innovative activities. The direct impact of institutional quality on technological innovation is heterogeneous, as it depends on the specific institutional quality indicators and their threshold levels. These findings have crucial policy implications for the governments of the African countries.

Does Institutional Quality Enhance the Effect of Health Outcomes on Economic Growth? Insights from Sub-Saharan African Countries

Institutional quality (InQ) plays an important role in shaping economic growth (ECG), influencing how economies develop and perform. The literature addresses the nexus between InQ and ECG and the link between health and ECG; findings are often contradictory, creating knowledge gaps. Importantly, research on the interplay between InQ, health, and ECG in Sub-Saharan African (SSA) countries is particularly limited. This study aims to address this gap by evaluating how health impacts ECG, with an emphasis on the mediating role of InQ in the health–growth nexus in SSA. This study examines these interplays across 35 SSA countries from 2012 to 2022. The life expectancy at birth (LEX) and real gross domestic product per capita (GDP) are used as proxies for health outcomes and ECG, respectively. The system generalised method of moments estimator is employed to analyse data. Results show that the LEX has a strong positive effect on economic growth in SSA countries. Furthermore, the InQ indicators (such as control of corruption, government effectiveness, rule of law and political stability, and absence of violence) are positively correlated with ECG. When the LEX interacts with InQ indicators, InQ is identified as a key channel through which LEX influences ECG. The findings confirm that InQ plays a crucial role in the health–growth nexus, with the positive impact of LEX on ECG being more pronounced in countries with higher levels of InQ, while the effect is weaker in countries with lower levels of InQ. The findings of this study have crucial policy implications, highlighting the intricate link among institutional quality, health outcomes, and economic growth. This study’s findings provide essential insights for policymakers to design focused strategies that improve InQ and health outcomes to achieve sustained ECG in SSA.

Examining the impact of mobile money on financial inclusion in Sub-Saharan Africa: the role of institutions and governance

PurposeThis paper aims to investigate the role of institutional quality in the relationship between mobile money and financial inclusion among Sub-Saharan Africa (SSA) from 2002 to 2022.Design/methodology/approachThe paper uses annual data from SSA on a bundle of four financial inclusion variables, six institutional quality indicators (i.e. rule of law, government effectiveness, control of corruption, voice and accountability, regulatory quality and political stability) and total volume of mobile money transaction in a year. The two-stage least squares regression was used to validate the hypotheses. Also, the random effects model was also used to account for potential unobserved heterogeneity across countries in SSA.FindingsThe empirical results reveal that institutional quality and mobile money have direct impact on financial inclusion. Also, institutional quality plays a positive and significant contingency role in the relationship between mobile money and financial inclusion.Originality/valueThe study contributes to financial inclusion theory by providing multi-country empirical evidence to validate the theory in explaining mobile money’s role in expanding financial access. It also highlights the key insight from financial inclusion theory regarding the need for strong governance institutions for technology-enabled inclusion. By examining interactions between mobile money, institutions and financial inclusion across 15 African SSA economies, the study allows for more generalizable conclusions about contextual dependencies.

Political Institutions and Environmental Sustainability: Asymmetric Effect of Institutional Quality Indicators on Ecological Degradation

Political Institutions and Environmental Sustainability: Asymmetric Effect of Institutional Quality Indicators on Ecological Degradation

The Role of Institutional Quality on FDI: A Comparison for Pre and Post – Global Financial Crises

In this study, the relative importance of institutional quality indicators on foreign direct investment (FDI) is investigated using a dynamic panel regression model for the countries that attracted the most FDI between 1996-2021. The World Bank (2023) data shows that FDI inflows gained a significant momentum at the beginning of the 2000s and reached its highest level in 2007. However, the Global Financial Crises (GFC) created a turning point in FDI inflows and it followed a very volatile course in the following years. For this reason, the analysis focused on the periods pre and post the global financial crisis. As a result of the study, it is revealed that all institutional quality indicators (except the rule of law) have positive effects on FDI inflows in the pre-crisis period, and regulatory effectiveness, government effectiveness and corruption control have a relatively higher impact on FDI inflows. On the other hand, it has been determined that no institutional quality indicator has a significant effect on foreign direct investments in the post-crisis period when FDI inflows are highly volatile.

An Empirical Analysis on Institutional Quality, Fiscal Policy and Debt Sustainability in Sub-Saharan Africa (SSA)

Many Sub-Saharan African (SSA) countries are finding it difficult to fulfill their massive debt repayment obligations, which bilateral financial institutions have declared to be unmanageable. Government institutions are to blame for such disparities in the budgetary components, which have been empirically confirmed to be detrimental. Part of the reason for SSA's income generation and debt management problems is related to fiscal policy components where there has been an unwarranted exaggeration of government expenditure. Accordingly, the current study used a panel Autoregressive Distributed Lag (ARDL) to examine how fiscal policy and institutional quality affected the sustainability of debt in 48 SSA nations between 2008 and 2022. The study’s findings suggested that the elements of fiscal policy (expenditure and revenue) as well as indicators of institutional quality (governance), such as control of corruption, effectiveness of government, political stability, absence of violence, regulatory quality, the rule of law, voice, and accountability, were important in explaining the long-term sustainability of public debt. The speed of adjustment to the long-run equilibrium was slow, which may be related to the unstable governance in each of the cross-sectional nations. Hence, the study concluded that the interactive effects of institutional quality and fiscal policy significantly influenced debt sustainability in the long run. The study’s conclusions can be very helpful to policymakers, particularly in those nations where major fiscal and external imbalances are being generated by low ratings for key institutional quality indices.

Volume-outcome relationships for intra-aortic balloon pump in acute myocardial infarction

Abstract Background Acute myocardial infarction (MI) is one of the major scenarios of intra-aortic balloon pump (IABP) use, particularly when complicated by cardiogenic shock. The utilization of mechanical circulatory support devices including IABP varies widely per hospital, while whether a higher IABP volume at each hospital is translated into better outcomes in acute MI is unclear. Purpose To evaluate the relationship between the volume of IABP use and mortality at the hospital level in patients with acute MI undergoing percutaneous coronary intervention (PCI). Methods Using a Japanese nationwide administrative database, a total of 26,490 patients with acute MI undergoing primary PCI from 154 hospitals were included. The primary endpoint was the observed/predicted in-hospital mortality ratio. The predicted mortality per patient was calculated using baseline variables and was averaged for each hospital. The associations among PCI volume for acute MI, observed and predicted in-hospital mortality, and observed and predicted IABP use were assessed at the hospital level. Results Of the 26,490 patients, 2,959 (11.2%) were treated with IABP and 1,283 (4.8%) died during hospitalization. The annualized number of IABP use per hospital in acute MI was 4.5 [2.4-10.7]. In lower primary PCI volume centers, IABP was more likely to be underused than expected, and the observed/predicted in-hospital mortality ratio was higher than in higher volume centers (Figure). The observed/predicted mortality ratio seemed lowest in hospitals where the observed/predicted IABP use ratio was around one. Conclusions The present study showed that the lower annual number of IABP use was associated with an increased mortality risk at the hospital level, and suggested that standardized IABP use can be an institutional quality indicator in a setting of acute MI.

THE RELATIONSHIP BETWEEN TAX REVENUES AND DEMOCRACY: AN APPLICATION ON EMERGING AND DEVELOPING COUNTRIES

States collect taxes as one-way revenues based on their sovereign power to provide public goods and services. However, over time, taxes have evolved from being based solely on the pure sovereign power of the states to an authority arising from the power of representation. In this context, the connection between taxation and democracy has become one of the critical discussion topics in the fiscal sociology literature. Since the 13th century, the expeditions guiding economic and political reform movements, coupled with rebellions against non-representative taxation, have played a fundamental role in shaping concepts such as representation and taxation in the evolution of the modern public financial structures. In parallel with the theoretical discussions, a broad empirical literature examining the connection between democracy and taxation has emerged due to attempts to measure the typology of political regimes in a country. Empirical findings indicate a positive relationship between democratization and taxation in advanced economies; however, this connection is ambiguous for emerging and developing countries. This study takes this gap in the literature into account and examines the effects of democratization, urbanization, and institutional quality indicators on tax revenues for 41 emerging and developing countries in the 2000-2018 period with dynamic panel data analysis techniques. Our findings indicate that democratization and the increasing share of urban population in total population have a positive impact on tax revenues in the context of emerging and developing countries.

International financial integration and financial stress of emerging market economies: The role of institutional quality

In the wake of unprecedented financial liberalization policies adopted by Emerging Market Economies (EMEs) since the late 20th century, their integration into global financial markets has brought forth both opportunities and challenges. This paper endeavors to assess the intricate relationship between international financial integration (IFI) and financial stress in EMEs, focusing on the potential moderating effect of institutional quality. Addressing key questions, it examines how various IFI indicators impact financial stress and evaluates the role of different dimensions of institutional quality in influencing this relationship. Using a Financial Stress Index (FSI) and employing the panel threshold regression technique, the study unveils significant threshold effects of institutional quality on the IFI-FSI nexus, with variations across different institutional factors. This study underscores the vital need for policymakers to identify threshold levels in institutional quality indicators to strike a balance between attracting investments and preventing unwarranted financial distress.

Impact of Urbanization, Development Level, and Openness on Institutions in Bangladesh: An ARDL Investigation Using Two Measures of Institutional Quality

Future development policies require a better understanding of the various factors that affect the quality of institutions in Bangladesh. In this paper, we estimate empirical ARDL models to investigate the roles of urbanization, openness, and the level of development as determinants of institutional quality. We use two measures of institutional quality, both derived from the World Bank’s Worldwide Governance Indicators (WGIs). The first proxy, INQ, is a composite index developed from the six WGIs using Principal Component Analysis (PCA). The second indicator, AvgINQ, is the average of the six WGIs. For each indicator of institutional quality, three models were estimated, resulting in six models in total. The impact of urbanization on institutional quality is consistent in terms of sign and significance across all six models, a claim that cannot be made for the other variables in the model. The error correction term reflects dampening convergence to equilibrium for the first proxy for institutional quality but regular convergence when the second proxy is used. In terms of ARDL diagnostics, models with AvgINQ as the dependent variable perform better. The Johansen cointegration test confirms the existence of a long-term relationship among the variables in all the models. Pairwise Granger causality tests are also conducted. The findings emphasize the importance of managing urbanization pressure for better institutional quality.

Effects of Corruption, Government Effectiveness and Political stability on Economic Growth: Evidence from Morocco

This study examines the impact of Corruption, government effectiveness and political stability on economic growth in Morocco. We conduct an empirical analysis to quantify the impact of institutional quality on economic growth over the period 1996 – 2021 by employing Two Stage Least Squares (2SLS). The findings reveal that corruption has a significant negative influence on economic growth, highlighting the importance of anti-corruption measures. On the other hand, political stability emerges as a key driver of economic growth, emphasizing the need for stable political environments to attract investments and foster entrepreneurship. Additionally, the growth of the public spending negatively affects GDP per capita, stressing the significance of prudent fiscal policies and effective public sector management. This research emphasizes the critical role of institutions, political stability, and efficient governance in driving economic growth. Policymakers can leverage these insights to enhance these institutional quality indicators and foster sustainable and inclusive economic development.

Volume-Outcome Relationships for Intra-Aortic Balloon Pump in Acute Myocardial Infarction.

Acute myocardial infarction (AMI) is a major scenario for the use of an intra-aortic balloon pump (IABP), particularly when complicated by cardiogenic shock, although the utilization of mechanical circulatory support devices varies widely per hospital. We evaluated the relationship, at the hospital level, between the volume of IABP use and mortality in AMI. Using a Japanese nationwide administrative database, 26,490 patients with AMI undergoing primary percutaneous coronary intervention (PCI) from 154 hospitals were included in this study. The primary endpoint was the observed-to-predicted in-hospital mortality ratio. Predicted mortality per patient was calculated using baseline variables and averaged for each hospital. The associations among PCI volume for AMI, observed and predicted in-hospital mortality, and observed and predicted IABP use were assessed per hospital. Of 26,490 patients, 2,959 (11.2%) were treated with IABP and 1,283 (4.8%) died during hospitalization. The annualized number of uses of IABP per hospital in AMI was 4.5. In lower-volume primary PCI centers, IABP was more likely to be underused than expected, and the observed-to-predicted in-hospital mortality ratio was higher than in higher-volume centers. A lower annual number of IABP use was associated with an increased mortality risk at the hospital level, suggesting that IABP use can be an institutional quality indicator in the setting of AMI.

USING CLUSTER ANALYSIS TO CLASSIFY SOME ARAB COUNTRIES INTO HOMOGENEOUS GROUPS ACCORDING TO INSTITUTIONAL QUALITY CRITERIA

Objective: The objective of this study is to explore the application of cluster analysis in categorizing select Arab countries into cohesive groups based on institutional quality criteria, which consist of six indicators measuring good governance in country. These indicators cover various dimensions and allow describing the quality of services provided by the state in a specific area comprehensively. These dimensions include the scope of state intervention, these dimensions are The Political Dimension, The Economic Dimension and The Legal Dimension. Method: This study adopts a research methodology that combines both descriptive and quantitative approaches. The descriptive approach is based on presenting concepts and describing relationships among institutional quality criteria. The quantitative approach involves using cluster analysis methods: K-Means clustering and Hierarchical Clustering to classify 11 Arab countries: UAE, Bahrain, Algeria, Egypt, Jordan, Morocco, Qatar, Saudi Arabia, Sudan, Tunisia, and Yemen. This was done to conduct cluster analysis to test the homogeneity of these countries regarding institutional quality determinants, represented by the following variables: Participation and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Legislative Quality, Rule of Law, Control of Corruption. Results and Discussion: The study reached the following results: - the K-Means Cluster Analysis Method is evident that The total number of cases classified in each cluster: Eleven countries were classified into seven countries: United Arab Emirates, Bahrain, Jordan, Morocco, Qatar, Saudi Arabia, and Tunisia in the first cluster and four countries in the second cluster: Algeria, Egypt, Sudan, and Yemen; -the variable Participation and Accountability does not significantly affect the classification of the Arab countries under study into homogeneous groups according to institutional quality indicators. However, variables such as Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Legislative Quality, Rule of Law, and Control of Corruption play a significant role in this classification; - the Hierarchical Clustering Analysis Method is evident that the Arab countries under study are distributed into two homogeneous groups. The first group forms Cluster 1, consisting of Jordan, Morocco, Tunisia, Bahrain, Saudi Arabia, Algeria, Egypt, the UAE, and Qatar. The second group belongs to Cluster 2, comprising Sudan and Yemen. This classification is based on institutional quality criteria. Originality/Value: This study sheds light on the importance of cluster analysis methods: the K-Means Cluster Analysis Method and the hierarchical cluster analysis method in classifying Arab countries according to the determinants of institutional quality, which are considered a determining factor for the economic growth of countries, and its consequent impact on various indicators reflecting economic, social, and political conditions. Consequently, institutional quality has emerged as a pivotal measure in highlighting developmental disparities among different countries. Many governments are endeavoring to create or adopt models to enhance the quality of their institutions, notwithstanding the similarities among Arab countries.

Institutional quality and US FDI outflows: Do political regimes matter?

To what extent are the locational decisions for US FDI outflows affected by the nature of the political regimes along with the quality of institutions in the host countries? Using property rights protection as an indicator of institutional quality, this study analyses how sensitive US FDI outflows are to institutional factors and to the nature of the hosting countries’ political regimes. In other words, whether a democratic or an autocratic regime makes any difference in terms of attracting US FDI. A joint effect between democracy and the protection of property rights on US FDI flows is examined using a panel data fixed effect technique for forty-one countries during the period 1984–2021. The instrumental variable method is used to check the endogeneity concerns. The results predict that the protection of property rights can have a positive impact in attracting US FDI, provided the countries in question become more democratic in nature. The findings suggest that partial reform to enhance the institutional quality or unconsolidated democratization are insufficient to attract US FDI rather than complementing each other in bringing FDI. The implication of the findings reveals that a democratic country such as India can be a good location for US investment if its protection of property rights becomes stronger. Moreover, some highly democratic countries with strong institutions should be more market oriented and improve their quality of infrastructure to receive the maximum benefit. Our results are robust to alternate measures of institutional quality/democracy and endogeneity concerns.

Tax revenue mobilization and institutional quality in sub‐Saharan Africa: An empirical investigation

AbstractThis paper investigates the effects of institutional quality on tax revenue collection in sub‐Saharan African countries. We include the six institutional quality indicators (i.e., voice and accountability, political stability, regulatory quality, rule of law, control of corruption, and government effectiveness) as explanatory factors for tax revenues and its components in a sample of 42 countries over the period 1996–2019. A system GMM approach was used for the estimations. Consistent with previous results, we find that institutional quality has positive and significant effects on tax revenue collection in sub‐Saharan Africa. Specifically, aggregate total tax revenues, direct taxes, income taxes, and goods and services taxes are positively affected by the six institutional quality indicators. Indirect taxes are positively associated with four indicators, with the exception of government effectiveness and political stability, while tax on international trade are affected by institutional quality factors, with the exception of control of corruption and voice and accountability. These findings indicate that sub‐Saharan African countries should improve institutional quality to boost tax revenue collection.

Institutional quality and emigration nexus: Empirical evidence from Türkiye

AbstractThis study attempts to fill an important gap in the empirical literature by investigating the impact of institutional quality in destination countries on emigrants from Türkiye using bilateral migration data from 2010 through 2020. For this purpose, the study builds an augmented gravity model, including economic, geographic, and cultural variables in an exponential form and estimates it by the Poisson Pseudo Maximum Likelihood (PPML) method. Empirical results significantly confirm the pulling role of strong institutions in destination countries for emigrants from Türkiye since all institutional quality indicators are positively associated with emigrant movements, albeit just one of them, regulatory quality, is statistically insignificant. Among indicators of institutional quality, the most pulling ones for emigrants are voice and accountability and the rule of law, followed by government effectiveness, control of corruption, and political stability and absence of violence, respectively. Overall results indicate that institutions are front‐line players in the emigrants' migration decision and destination choice process. In this context, policy‐makers in both Türkiye and the destination country may implement an institutional policy considering the outcomes stemming from migration movements.

EU Countries Tax Evasion Clustering

The problem of tax evasion is becoming more and more prominent, and it is causing large losses in individual state budgets. However, European policies have taken significant steps to eliminate them over the last two decades. National policies also contribute to reducing the estimated extent of tax evasion, as measured by Schneider's MIMIC model. However, these tendencies are not the same in individual countries. Therefore, in our paper, we try to find pattern in tax evasion time trajectories of European Union countries and thus to create homogenous clusters that include countries with similar tax evasion situation. To meet our goal, we use panel data clustering method on our data with information about tax evasion of EU countries from 2000 to 2019. As a next step, we compare created cluster from the perspective of quality indicators of public institutions.

Monetary Policy, Institutional Quality and Banking System Fragility in Nigeria

The banking sector is dependent on the economy and environment in which it operates for survival and stability. Lack of effective and efficient institutions and bad monetary policies may spell doom for a country’s banking system. In Nigeria, over the years, many banks did not become distressed, they have folded up as a result of problems relating to institutional quality and unfriendly monetary policies. This study, therefore, examined the effect of both institutional quality indicators and monetary policies on the fragility of the Nigerian banking system from 2000 to 2022. We used a dataset comprising six institutional quality and three monetary policy variables as well as the banking system fragility indices for the period 2000 – 2022. Having examined the statistical properties and conducted some pre-estimation tests, we employed the autoregressive distributed lag (ARDL) technique to determine the short and long run effects of the institutional quality and monetary policy variables on the banking system fragility index for the period. We found that, in the short run, in terms of institutional quality, only voice and accountability index had a declining effect on banks’ stability (worsening fragility) while with respect to monetary policy, loan-deposit ratio had a positive effect on the fragility index (reducing fragility). In the long run, neither the institutional quality nor the monetary policy variables have significant effect on the fragility index of the Nigerian banking system during the period. We conclude that institutional quality and monetary policy affect the Nigerian banking system fragility significantly in the short run and that the former have no significant effect on the latter on the long run. We recommend a focused approach on institutional reforms and periodic assessments and adjustments of the reforms, capacity building, improvement of institutional coordination, and ensuring that policies are not only well-designed but also effectively implemented and a continuous fine-tuning of monetary policies to adapt to changing economic conditions.

Assessing the spatial equity of the aged care institutions based on the improved potential model: a case study in Shanghai, China.

With the spread of an aging society, the demand for aged care institutions among older adults is increasing. The inadequate supply and distribution of aged care institutions have led to an increasing concern about spatial equity in aged care institutions. Most studies have utilized accessibility to assess spatial equity from the supply perspective, while the demand perspective has received little attention. In addition, few studies have evaluated the spatial equity of aged care institutions at grid resolution. Therefore, this study takes Shanghai as an example to analyze aged care institutions from both the supply and demand perspectives. By proposing an improved potential model, at a network resolution of 500 × 500, the spatial equity of aged care institutions is more refined. The results show that aged care institutions and the older population in Shanghai are predominantly concentrated in the downtown area and surrounding regions. However, the results obtained from the Lorenz curve and Gini coefficient indicate the allocation of pension beds based on population size is proportional across different districts of Shanghai. When considering the quality indicators of aged care institutions and introducing the improved potential energy model to calculate spatial accessibility, an imbalance between regions in Shanghai still exists and needs further optimization.

On the government revenue on economic growth of Sub-Saharan Africa: Does institutional quality matter?

As studies report inconclusive results, the linkage between government revenue and economic growth remains a topic of debate in economic literature. This study investigates the effect of government revenue on the economic growth of Sub-Saharan African countries with the main objective of whether institutional quality matters. The panel data for 43 SSA countries were obtained from dependable data sources: World Development Indicator and Heritage Economic Freedom Index for the period of 2012–2022. The result from system GMM estimation reveals that government revenue adversely affects economic growth while institutional quality positively enhances economic growth before interacting with each other. However, the interactive coefficient of government revenue and economic growth positively affected the real GDP growth rate of SSA countries over the study periods. Precisely, before interacting with institutional quality, a percentage change in government revenue, keeping all other things constant, leads to a 0.0866% decline in economic growth while it marks a 0.2329% upsurge in economic growth in the presence of institutional quality. The result of the study further revealed that government revenue promotes the economic growth of the region when combined with institutional quality. On the other hand, foreign direct investment and openness to trade were the key sources of economic growth whereas the population growth rate adversely impacted economic growth in SSA countries during the study period under consideration. The policy implication of the study is that SSA needs to strengthen government revenue management. Further, the finding of the study implies that SSA countries need to improve institutional quality through promoting efficiency of the regulatory quality and the size of the SSA governments. In addition to this, the fast real GDP growth rate of SSA countries demands improved institutional quality indicators such as the rule of law and extended access to the open market.