THE ROLE OF INSTITUTIONAL QUALITY IN FINANCE-GROWTH NEXUS: EVIDENCE FROM GCC COUNTRIES
DOI:
https://doi.org/10.61421/IJSSMER.2025.3101Keywords:
Financial development, Institutions, Economic growth, Panel data analysisAbstract
This study aims to determine the relationship between financial development and economic growth with respect to the state of institutional quality on 3 Gulf Cooperation Council (GCC) countries, namely, Oman, Qatar and United Arab Emirates from 2008 to 2022. Using the dynamic generalized method of moments in a panel data analysis, we found that financial development has a positive effect on economic growth. Equally important, the institutional quality plays a significant and positive role in economic growth. More interestingly, the study finds that the institutional development is complementary to financial development. As a policy implication, we recommend that policymakers place special importance on implementing policies that result in the deepening of financial systems, including a sound institutional framework. Thus, by promoting the development of a country’s financial system, economic growth will be accelerated.
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