Role of financial development in economic globalization: evidence from global panel

Abstract

The present study examines the role of financial development in globalization using the global panel data set. Annual data that ranges from 1980 to 2014 has been selected for 181 countries. Panel econometric procedures reveal that financial markets positively in general impacts on economic globalization. However, when macroeconomic fundamentals such as national income, inflation, capital, and population growth are taken into consideration this effect sometimes becomes negative depending on the type of macroeconomic factor and methodology used. This study concludes at the end that financial development is significant driver for economic globalization all around the world.