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ID: 151709

Does civil war hamper financial development? / Murshed, Syed Mansoob; Hasan, M Rashel

Murshed, Syed Mansoob	Journal Article
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We examine how armed conflict effects financial development in a cross-country setting using dynamic panel data analysis in a panel of 66 developing countries for the period 1985–2010. Financial development is measured by M2 as a share of GDP, and credit allocated to private sector by banks as a share of GDP. Our findings suggest that armed conflict has a significant adverse effect on financial development. Simultaneously, the quality of governance is always highly significant and conducive to the financial development. The quality of governance is more salient in determining financial development compared to low- and medium-intensity armed conflict; however, the quality of governance cannot entirely offset the adverse impact of high-intensity armed conflict on financial development.

Key Words

Armed Conflict ; Financial Development ; Civil War ; Governance Quality

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ID: 179005

Political Economy of Governance Quality / Ting, Michael M

Ting, Michael M	Journal Article
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This paper develops a dynamic theory of the social and political foundations of governance quality. In the model, groups of citizens have different expected needs for a public service, and citizens choose whether to demand service when the need arises. Politicians representing these groups can determine policy benefits and delegate to bureaucrats the ability to invest in long-run service quality. The main feature of the theory is its foundation for citizen–government interactions, which draws from well-known queueing models of organizational service provision. The model provides a framework for characterizing the effectiveness and durability of government programs. A main implication is that politicized bureaucracies improve program survivability and increase the frequency of investment, while insulated bureaucracies increase the intensity of investment; overall service quality trades off between these two factors. Other results examine the implications of cross-group inequality, electoral conditions, and decentralization.

Key Words

Political Economy ; Governance Quality

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