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Political institutions and financial cooperative development

Published online by Cambridge University Press:  02 November 2016

AMR KHAFAGY
AMR KHAFAGY*
Affiliation:
Institute of Development Research and Development Policy, Ruhr-University Bochum, Bochum, Germany
*
*Email: amfkhafagy@gmail.com
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Abstract

This paper analyses the influence of political institutions on the development of financial cooperatives. It proposes a political economy theory where autocratic regimes deliberately oppose the development of a well-functioning financial cooperative sector to maintain their political influence, and prevent the formation of strong pressure groups that can threaten the current political status quo and reduce the governing elites’ economic benefits from underdeveloped and exclusive financial sector. Using panel data from 65 developing countries from 1995–2014, the results show that democracy, political rights and civil liberties promote financial cooperative development. These results are robust in controlling for endogeneity as well as other economic and institutional factors.

Type
Research Article
Information
Journal of Institutional Economics , Volume 13 , Issue 2 , June 2017 , pp. 467 - 498
Copyright
Copyright © Millennium Economics Ltd 2016 

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