Title: Political replacement effect and financial development: Evidence across countries
Authors: Alfonsina Iona - Queen Mary University of London (United Kingdom) [presenting]
Leone Leonida - King's College London (United Kingdom)
Dawit Zerihun Assefa - Neoma Business School (France)
Abstract: The Politics and Finance literature argues that political factors are responsible for shaping a country's financial development. In line with this view, we analyse the impact of political competition on financial development across 124 countries over the period 1970-2015. The results show that political competition Granger causes financial development, and there is a political replacement effect of political competition on financial development. However, the relationship between political competition and financial development is U-shaped. The results are robust to the origin of a country's legal system, to different subsamples and alternative measures of financial development and political competition.