Financial development,industrialization, the role of institutions and government: a comparative analysis between India and China |
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| Authors: | Muhammad Shahbaz Mita Bhattacharya Mantu Kumar Mahalik |
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| Affiliation: | 1. Montpellier Business School, Montpellier, France;2. Department of Economics, Monash University, Caulfield, Australia;3. Department of Humanities and Social Sciences, National Institute of Technology (NIT), Rourkela, India |
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| Abstract: | This research is the first comparative attempt incorporating the role of economic, demographic, sectoral contribution, government and trade in explaining financial development for India and China. Using time-series estimations, we establish that institutional quality and government size impede financial development, whereas urbanization, industrialization and service sector growth help in financial development for both countries. Trade openness also enhances Indian financial development but hinders Chinese financial development. We suggest that the policy advisers should not underestimate the role of urbanization, industrialization and service sector growth in implementing financial development. Finally, we find that the institutions and governments will play a key role for both economies in enhancing finance and growth. |
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| Keywords: | India China financial development institutions |
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