Does Governance Quality Matter? A Comparative Investigation of Financial Liberalization and Economic Growth in Developed and Developing Countries

Bibliographic Data

ID21723918
AuthorsSalma Zahir (0000-0003-4639-0190, Department & Faculty of Economics, Higher Education Department Government Girls Degree College Marghuz Swabi Khyber Pakhtunkhwa Pakistan), Haseeb Ur Rahman (0000-0002-5452-2977, Institute of Management Sciences, University of Science and Technology Bannu Khyber Pakhtunkhwa Pakistan), Ismail Khan (0000-0001-7539-7135, Faculty of Management and Economics Kunming University of Science & Technology Kunming Yunnan China), Sami Ullah Khan (0000-0001-5826-1279, Department & Faculty of Economics University of Swabi Swabi Khyber Pakhtunkhwa Pakistan), Shahid Khan (0000-0002-6275-8621, Department & Faculty of Sociology & Criminology Kohat University of Science & Technology Kohat Khyber Pakhtunkhwa Pakistan)
Year2026
Volume26
Issue3
Publication date2026-08-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Public Affairs (JOURNAL)
Journal identifiersISSN: 1472-3891 • E-ISSN: 1479-1854
PublisherWiley (PUBLISHER • GB)
DOI10.1002/pa.70147
OpenAlexW7167082303
LanguageEN
References cited65

This paper aims to examine the direct and interaction effects of financial liberalization and governance quality on economic growth (EG) from multi‐theoretical perspectives, both in developed and developing countries. In addition to using the Generalized Method of Moments (GMM) for estimation, the study also employs the principal component analysis (PCA) method to construct indices for financial liberalization and governance quality, assessing their influence on EG in 28 countries (10 developed and 18 developing) from 1996 to 2023. The findings indicate that both the financial liberalization index and its interaction with governance quality have a significant positive impact on EG across all the sampled countries. A comparative analysis reveals that financial liberalization and governance quality contribute more to EG in developed countries than in developing countries. The outcomes suggest that regulators and policymakers, especially in developing countries, should place greater emphasis on financial liberalization and governance quality to enhance EG. These countries should develop and implement effective financial liberalization policies while fostering strong governance frameworks to maximize their economic potential. Moreover, this study not only contributes to the existing body of knowledge but also provides valuable insights into whether developed or developing countries benefit more from financial liberalization

Corporate governance · Developing country · Economic liberalization · Good governance · Liberalization · Corruption and Economic Development · Economic Growth and Development · Fiscal Policies and Political Economy

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