Economic freedom and banking development: the experiences of selected east asian countries

This paper investigates the role of economic freedom in banking sector development using a panel data set for the period 1975-2006 in six East Asian countries, namely Singapore, Malaysia, Indonesia, Thailand, South Korea and the Philippines. We find a direct positive link between economic freedom an...

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Main Authors:	Soo-Wah Low, Noor Azlan Ghazali, Shamshubaridah Ramlee, Rasidah Mohd Said
Format:	Article
Published:	Penerbit Universiti Kebangsaan Malaysia 2010
Online Access:	http://journalarticle.ukm.my/1774/ http://journalarticle.ukm.my/1774/

id	ukm-1774
recordtype	eprints
spelling	ukm-17742011-06-13T03:48:15Z http://journalarticle.ukm.my/1774/ Economic freedom and banking development: the experiences of selected east asian countries Soo-Wah Low, Noor Azlan Ghazali, Shamshubaridah Ramlee, Rasidah Mohd Said, This paper investigates the role of economic freedom in banking sector development using a panel data set for the period 1975-2006 in six East Asian countries, namely Singapore, Malaysia, Indonesia, Thailand, South Korea and the Philippines. We find a direct positive link between economic freedom and banking sector development for the benchmark country, Singapore and the effects of economic freedom on banking development are not common to all countries. Differential effects are observed for Malaysia and Thailand indicating that specific country factors are at work. To establish a firmer link between economic freedom and banking development, we decompose the economic freedom index into its various sub-components. We find that legal quality is the only sub-component that is positively and robustly related to all measures of banking development that we employ and that the effect for Malaysia is different from that in Singapore. This suggests that, protection of property rights and effective enforcement of contracts are critical elements in promoting banking development. A country’s legal system needs to be strengthened if banking sector is to function well. However, the extent to which legal systems need improvement differs across countries with different institutional framework Penerbit Universiti Kebangsaan Malaysia 2010-12 Article PeerReviewed Soo-Wah Low, and Noor Azlan Ghazali, and Shamshubaridah Ramlee, and Rasidah Mohd Said, (2010) Economic freedom and banking development: the experiences of selected east asian countries. Jurnal Pengurusan, 31 . ISSN 0127-2713 http://www.ukm.my/penerbit/jurus.htm
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
description	This paper investigates the role of economic freedom in banking sector development using a panel data set for the period 1975-2006 in six East Asian countries, namely Singapore, Malaysia, Indonesia, Thailand, South Korea and the Philippines. We find a direct positive link between economic freedom and banking sector development for the benchmark country, Singapore and the effects of economic freedom on banking development are not common to all countries. Differential effects are observed for Malaysia and Thailand indicating that specific country factors are at work. To establish a firmer link between economic freedom and banking development, we decompose the economic freedom index into its various sub-components. We find that legal quality is the only sub-component that is positively and robustly related to all measures of banking development that we employ and that the effect for Malaysia is different from that in Singapore. This suggests that, protection of property rights and effective enforcement of contracts are critical elements in promoting banking development. A country’s legal system needs to be strengthened if banking sector is to function well. However, the extent to which legal systems need improvement differs across countries with different institutional framework
format	Article
author	Soo-Wah Low, Noor Azlan Ghazali, Shamshubaridah Ramlee, Rasidah Mohd Said,
spellingShingle	Soo-Wah Low, Noor Azlan Ghazali, Shamshubaridah Ramlee, Rasidah Mohd Said, Economic freedom and banking development: the experiences of selected east asian countries
author_facet	Soo-Wah Low, Noor Azlan Ghazali, Shamshubaridah Ramlee, Rasidah Mohd Said,
author_sort	Soo-Wah Low,
title	Economic freedom and banking development: the experiences of selected east asian countries
title_short	Economic freedom and banking development: the experiences of selected east asian countries
title_full	Economic freedom and banking development: the experiences of selected east asian countries
title_fullStr	Economic freedom and banking development: the experiences of selected east asian countries
title_full_unstemmed	Economic freedom and banking development: the experiences of selected east asian countries
title_sort	economic freedom and banking development: the experiences of selected east asian countries
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2010
url	http://journalarticle.ukm.my/1774/ http://journalarticle.ukm.my/1774/
first_indexed	2023-09-18T19:34:17Z
last_indexed	2023-09-18T19:34:17Z
_version_	1777405166524301312

Economic freedom and banking development: the experiences of selected east asian countries

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