Does economic freedom promote financial development? Evidence from EU countries

Anand Sharma; Vipin Sharma; Shekhar Tokas

doi:https://doi.org/10.59170/stattrans-2023-043

Does economic freedom promote financial development? Evidence from EU countries

Anand Sharma O. P. Jindal Global University, Sonipat, India ORCID:https://orcid.org/0009-0007-7467-6918 , Vipin Sharma University School of Business, Chandigarh University, Mohali, India ORCID:https://orcid.org/0000-0002-4215-9808 , Shekhar Tokas Dr. B. R. Ambedkar University, Delhi, India ORCID:https://orcid.org/0000-0001-8470-3392 Statistics in Transition new series, vol. 24, 2023, 3, pages: 187-200 Published online: 13 June 2023 https://doi.org/10.59170/stattrans-2023-043 Citation: Sharma, A., Sharma, V., Tokas, S., 2023. Does economic freedom promote financial development? Evidence from EU countries. Statistics in Transition new series, 24(3), pp. 187-200. https://doi.org/10.59170/stattrans-2023-043

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ABSTRACT

This study empirically investigates the relationship between economic freedom and financial development in EU countries. Using panel data covering the years 2000 2017 and employing fixed effects, random effects, and the generalised method of moments (GMM), the paper examines the effect of economic freedom on financial development. The research results demonstrate that greater economic freedom is conducive to financial development in the EU. These findings remain robust to the use of an alternative index of economic freedom. The results imply that policies which promote economic freedom are likely to raise the level of a country’s financial development.

KEYWORDS

economic freedom, financial development, panel data, EU.

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