Financial development and governance: A panel data analysis incorporating cross-sectional dependence

This study investigates bidirectional causality between governance and financial development using panel data of 101 countries from 1984 to 2013. The development–governance nexus is explored econometric methods robust cross-sectional dependence, the relationship different levels openness analyzed. Long-run equation estimates show clear evidence that positively affects governance, this positive impact found be three measures governance. Further analysis shows improving quality has a effect on development, while Granger tests demonstrate measures. Finally, dependent country’s level openness. These findings underscore crucial role in bringing about good reforms economic growth that, turn, can further develop sector. As such, symbiotic synergistic persist growth, development. provide significant motivation for policymakers encourage sector lift standard living, especially emerging economies.