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Financial development and prehistoric geographical isolation: global evidence

  • Oasis Kodila-Tedika (a1), Simplice A. Asongu (a2), Matthias Cinyabuguma (a3) and Vanessa S. Tchamyou (a4)

Using cross-country differences in the degree of isolation before the advent of technologies in sea and air transportation, we assess the relationship between geographical isolation and financial development across the globe. We find that prehistoric geographical isolation has been beneficial to development because it has contributed to contemporary cross-country differences in financial intermediary development. The relationship is robust to alternative samples, different estimation techniques, outliers and varying conditioning information sets. The established positive relationship between geographical isolation and financial intermediary development does not significantly extend to stock market development.

Corresponding author
S. A. Asongu (corresponding author), African Governance and Development Institute, PO Box 8413, Yaoundé, Cameroon; Department of Economics and Development Studies, Covenant University, Ota, Ogun State, Nigeria; and Development Finance Centre, Graduate School of Business, University of Cape Town, Cape Town, South Africa; e-mail:
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We thank James B. Ang, who supplied us most of the data used in this research. We are also grateful to the journal's anonymous referees for their helpful comments and suggestions. The usual disclaimer applies.

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Financial History Review
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