Financial development and developing country Essay

Furthermore, financial development can be measured by a number of factors including the size, depth, access, and soundness of financial system. It can be measured by examining the performance and activities of the financial markets, banks, bond markets and financial institutions. It is observed that when the degree of financial development in a country increases, the wider will be the availability of financial services. A developed financial system usually offers higher returns with less risk.
Besides the definition of financial development, we also need to understand the meaning of developing country. There are several definitions of a developing country. A developing country can be defined in term of a nation with undeveloped industrial base, minimum Human Development Index (HDI) relative to other countries and low standard of living (Moradian et al.). Besides that, developing countries with more advanced economies than other developing countries but they are not yet fully shown the signs of a developed country are categorized under the term of newly industrialized countries (Behera, 2016).
According to Kira (2013), the development of a country is measured with statistical indexes such as income per capita (per person) (GDP), life expectancy, health services, the rate of literacy and many more. The United Nations (UN) has developed an indicator for development of the countries statistics. The function of this indicator is to evaluate the level of human development in countries where data are available. Besides that, according to business dictionary, developing country can be defined in a term used in order to describe about the countries that lack and have low capacities on their infrastructure, sophisticated technology, industrialization but the countries are in the process of building all these capabilities.
There are seventy-six (76) developing countries have been used in this study. There are Algeria, Argentina, Benin, Burkina Faso, Burundi, Bahrain, Bhutan, Brazil, Bangladesh, Cameroon, Central African Republic, Chad, Comoros, Congo, Dem. Rep. of the Congo, Cambodia, China, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Egypt, Equatorial Guinea, Fiji, Gabon, Gambia, Ghana, Guinea-Bissau, Guyana, Guatemala, Haiti, Honduras, India, Indonesia, Iran, Iraq, Jordan, Jamaica, Kuwait, Kenya, Korea South, Liberia, Libya, Malaysia, Mexico, Mongolia, Madagascar, Malawi, Mali, Morocco, Mozambique, Nepal, Nigeria, Niger, Oman, Paraguay, Peru, Pakistan, Philippines, Qatar, Saudi Arabia, Singapore, Solomon Islands, South Africa, Senegal, Turkey, Tunisia, Togo, Thailand, Trinidad and Tobago, Uruguay, Uganda, Vietnam, Venezuela, Zambia. These countries had been choosing based on the availability of data for the dependent variable and independent variables used in this study.
This study also focuses on institutions. According to Hodgson (2008), institutions are the kinds of structures that matter most in make up the stuff of social life. Furthermore, the increasing acknowledgement of the role of institutions in social life that involves the recognition of human interaction and the activity is structured in terms of implicit rules or overt. We also may define institutions as a system of established and the prevalent social rules which structure social interactions. Institutions can refer as language, money, law, systems of weights and measures, table manners, and firms.